Chapter 10 My Nursing Test Banks

1. What is fiscal planning?
A) A learned skill that improves with practice
B) A job role of the facility business manager
C) Part of the organizing phase of the management process
D) Reactive based on political, social, and economic forces
Ans: A
Fiscal planning is a learned skill and must include nursing management input. It should never be reactive, and it is part of the planning process of management.

2. What
A) An organizations revenues, expenses, assets, and liabilities are someones

is the basic principle of responsibility accounting?


  1. B)  Managers have a responsibility to submit their budgets on time.
  2. C)  The organizations financial officer works with department heads regarding

    budget approval.

  3. D)  Fiscal accounting should be honest and accurate.

Ans: A
Responsibility accounting requires that someone must be responsible for all revenue, expenses, assets, and liabilities. While true, the other options are not the basic principle of responsibility accounting.

3. Which activity is a responsibility of the unit manager regarding fiscal planning?

  1. A)  To assume responsibility for achieving budgetary planning goals
  2. B)  To monitor and evaluate all aspects of the units budget control
  3. C)  To streamline the number of subordinates involved in the budgetary process
  4. D)  To control unpredictable census variations that may undermine the personnel


Ans: B


The managers responsibility is to monitor all aspects of the units budget. The other options fail to identify a managers responsibility.

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4. Which is a leadership role in fiscal planning?

  1. A)  Coordinating the monitoring aspects of budget control
  2. B)  Accurately assessing personnel needs using agreed-on standards or an established

    patient classification system

  3. C)  Assessing the internal and external environment of the organization in forecasting

    to identify driving forces and barriers to fiscal planning

  4. D)  Being visionary in identifying short- and long-term unit fiscal needs

Ans: D
Leaders are visionary; the other roles are management related.

5. What

  1. A)  Incremental budgeting
  2. B)  Perpetual budgeting
  3. C)  Zero-based budgeting
  4. D)  Managed care

Ans: C
Zero-based budgeting begins each year with zero and requires rejustification. This is not true of the other options.

6. Equipment depreciation, the number and type of supplies needed by patients, and overtime that occurs in response to an emergency are all examples of what type of expenses?

  1. A)  Controllable
  2. B)  Fixed
  3. C)  Capital budget
  4. D)  Noncontrollable

Ans: D
The items mentioned are noncontrollable as these cannot be controlled or fixed and are not parts of capital costs.

type of budget requires rejustification for yearly fiscal needs?

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7. What is inferred if an item is icost-effectivei? A) It is the least expensive product available B) It is worth the cost
C) It is reimbursable

D) Its cost was anticipated
Ans: B
Cost-effective does not necessarily imply the cheapest, but it requires that the expenditure be worth the cost. The other options are not characteristic of the term icost effective.i

8. What

  1. A)  The personnel budget
  2. B)  Short-term capital acquisitions
  3. C)  The operating budget
  4. D)  Supplies and equipment

Ans: A
Health care is labor intensive; therefore, the personnel budget makes up the largest expense. The other options represent less expensive expenditures.

9. Determine the nursing care hours per patient day (NCH/PPD) if the following staffing existed for a 24-hour period (unit census = 10):
12 midnight to 12 noon, 1 registered nurse, 1 licensed vocational nurse
12 noon to 12 midnight, 1 registered nurse, 1 licensed vocational nurse, 1 unit clerk (8 hours only)

  1. A)  5.6 NCH/PPD
  2. B)  4.8 NCH/PPD
  3. C)  5.0 NCH/PPD
  4. D)  6.2 NCH/PPD

Ans: A


A total of 56 hours of nursing was worked in 24 hours (unit clerks are counted in NCH/PPD) and the census was 10 patients. Dividing the total number of nursing care hours by the census (56 divided by 10) yields an NCH/PPD calculation of 5.6 NCH/PPD.

is the largest budget expenditure for health-care organizations?

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10. The measurement of NCH/PPD will provide what information?

  1. A)  The acuity level of the patients on a particular unit in a 24-hour time span
  2. B)  The total number of hours worked by nursing personnel on a particular unit in a

    24-hour time span divided by the patient census

  3. C)  The specific amount of money spent on staffing during a 24-hour period
  4. D)  The quality of nursing care that was provided on a particular unit in a 24-hour

    time span

Ans: B


The Personnel Budget NCH/PPD refers to number of nursing care hours worked in 24 hours divided by the patient census.

11. What is the name for a provision of health care in an organized system to subscribing members in a geographical area with an agreed-on set of basic and preventive supplemental health maintenance and treatment services for a fixed, prepaid charge?

  1. A)  Preferred provider organizations (PPOs)
  2. B)  A traditional third-party payer indemnity plan
  3. C)  A health maintenance organization (HMO)
  4. D)  Diagnostic-related groupings (DRGs)

Ans: C


HMOs provide health care in an organized system to subscribing members in a geographical area with an agreed-on set of basic and preventive supplemental health maintenance and treatment services for a fixed, prepaid charge. That definition does not apply to the other options.

12. What

  1. A)  Skyrocketing health-care costs following the advent of Medicare and Medicaid
  2. B)  The passage of the Health Maintenance Act of 1973
  3. C)  The introduction of the Health Security Act to Congress
  4. D)  A coalition held by the three largest private insurers in 1975

Ans: A
Prospective payment systems were the result of skyrocketing medical costs in the United States. That is not true of the other options.

was the primary reason for the development of the prospective payment system?

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  1. What is capitation?
    A) A reimbursement schema whereby health-care organizations receive a

    predetermined amount (based on a patients diagnosis for services provided) B) The limited availability of services to patients in managed care organizations C) The use of a igatekeeperi to ensure appropriate utilization of services
    D) A predetermined, negotiated payment to providers, per patient, regardless of

    whether services are used Ans: D


    Capitation is a predetermined, negotiated payment to providers, per patient, regardless of whether services are used. None of the other options correctly describe capitation.

  2. Which use of limited resources would result in increased reimbursement revenues?
    1. A)  Education on appropriate documentation on patient care records
    2. B)  Number of clinical nurse specialists
    3. C)  Educational paid days for licensed staff
    4. D)  Mix and number of clinical staff

Ans: A
Although options B, C, and D have the potential to improve patient care, education on documentation would most likely increase revenues.

15. Which statement best describes critical pathways?

  1. A)  They determine justifiable differences among clients
  2. B)  They decrease the amount of paperwork required for reimbursement
  3. C)  They reduce administrative costs
  4. D)  They provide a means of standardizing care for clients with similar diagnoses

Ans: D
Critical pathways are one means of standardizing care for clients with similar diagnoses. The other options are not true statements regarding critical pathways.

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16. Using a decision package to aid in fiscal priority setting is a key feature of what type of budgeting?

  1. A)  Personnel workforce
  2. B)  Operating
  3. C)  Capital
  4. D)  Zero based

Ans: D


Managers must rejustify their program or needs every budgeting cycle in zero-based budgeting. Among the options available using a decision package to set funding priorities is a key feature of only zero-based budgeting.

17. Key principles of managed care include: 1. Nurses as gatekeepers

2. Focus on prevention
3. Decreased emphasis on inpatient hospital care 4. Capitation

  1. A)  1, 2, 3
  2. B)  1, 2, 4
  3. C)  1, 3, 4
  4. D)  2, 3, 4

Ans: D
Key principles of managed care include the use of primary care providers as gatekeepers, a focus on prevention, a decreased emphasis on inpatient hospital care, the use of clinical practice guidelines for providers, selective contracting, capitation, utilization review, the use of formularies to manage pharmacy care, and continuous quality monitoring and improvement.

18. Which statement accurately describes provision of service?

  1. It guarantees reimbursement
  2. Proof is required for need for services
  3. Reimbursement is based on services provided
  4. The social worker is the gatekeeper
  1. A)  1, 2
  2. B)  1, 4
  3. C)  2, 3
  4. D)  3, 4

Ans: C
Provision of service no longer guarantees reimbursement. Clear and comprehensive documentation of the need for services and actual services provided is needed for reimbursement.

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19. What are the results of managed care backlash? 1. Delay of payment for services provided
2. Denial of requests for additional treatment
3. Increased premiums to consumers

4. Lower co-pays and deductibles

  1. A)  1, 2
  2. B)  1, 3
  3. C)  2, 4
  4. D)  3, 4

Ans: B
Providers have grown increasingly frustrated with limited and delayed reimbursement for services provided as well as the need to justify need for services ordered. This phenomenon, referred to as managed care backlash, resulted in some managed care programs beginning to say iyesi to more treatments although they have passed the cost along with customers in the form of higher premiums, co-pays, and deductibles.

20. What changed the structure of Medicare payments from a retrospectively adjusted cost reimbursement system to a prospective, risk-based one?

  1. A)  Zero-based budgets
  2. B)  Diagnostic-related groupings
  3. C)  Prospective payment system
  4. D)  Incremental budgets

Ans: B Feedback:

The impetus of diagnosis-related groupings changed the structure of Medicare payments from a retrospectively adjusted cost reimbursement system to a prospective, risk-based one. None of the other options were involved in the change.

21. Which statement concerning a budget is true?

  1. A)  A budgets reliability is related to how far in advance it was created
  2. B)  Budgets should be created as far in advance is possible
  3. C)  A budget is revised every 3 months during a fiscal year
  4. D)  Budgets are reliable only when expenses are fixed

Ans: A
A budget that is predicted too far in advance has greater probability for error. The other options are incorrect statements regarding a budget.

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22. Which statement regarding fiscal planning is true? Select all that apply.

  1. A)  Social influences affect fiscal planning
  2. B)  The successful fiscal planner is creative
  3. C)  An understanding of economic forces is necessary
  4. D)  Practical experience is a key to being a good fiscal planner

Ans: A, B, C, D
Fiscal planning is not intuitive; it is a learned skill that improves with practice. Fiscal planning also requires vision, creativity, and a thorough knowledge of the political, social, and economic forces that shape health care.

23. Which statement about American health-care budget spending is correct?

  1. A)  A large health-care budget equals quality health-care outcomes
  2. B)  America spends less than any other industrialized country on health care
  3. C)  The outcomes related to lownbirth-weight infants have not been successfully met
  4. D)  The scarcity of resources is the biggest factor in the failure to reach outcomes

Ans: C
Spending more does not always equate to higher-quality health outcomes. The United States spends more per capita on health care than does any other industrialized country, and yet our outcomes in terms of teenage pregnancy rates, lownbirth-weight infants, and access to care are worse than many countries that spend significantly less. The problem then is not a scarcity of resources. The problem is that we do not use the resources we have available, in a cost-effective manner.

24. Which factor is primarily important when budgeting for a healthcare facility?

  1. A)  Services provided
  2. B)  Budget time frame
  3. C)  Size of organization
  4. D)  Acuity of patients being served

Ans: B
Selecting the optimal time frame for budgeting is important. Errors are more likely if the budget is projected too far in advance. The other options are considered but not of primary importance.

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25. Which statement regarding a budget is true? Select all that apply.

  1. A)  A budget contains an estimate of both expenses and income for a year.
  2. B)  It allows for an institution to plan for the effective use of its resources
  3. C)  The cost of supplies is an example of a variable expense
  4. D)  A mortgage is an example of a fixed expense

Ans: A, B, C, D
A budget is a financial plan that includes estimated expenses as well as income for a period of time. Accuracy dictates the worth of a budget; the more accurate the budget blueprint, the better the institution can plan the most efficient use of its resources. Because a budget is at best a prediction, a plan, and not a rule, fiscal planning requires flexibility, ongoing evaluation, and revision. In the budget, expenses are classified as fixed or variable and either controllable or noncontrollable. Fixed expenses do not vary with volume, whereas variable expenses do. Examples of fixed expenses might be a buildings mortgage payment or a managers salary; variable expenses might include the payroll of hourly wage employees and the cost of supplies.

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