Chapter 4: Basic Clinical Health Care Economics My Nursing Test Banks

Chapter 4: Basic Clinical Health Care Economics

MULTIPLE CHOICE

1. A student in an economics course is aware that the three premises that the study of economics is based upon would involve which of the following?

a.

Price elasticity, choice, and scarcity

b.

Scarcity, choice, and preference

c.

Choice, price elasticity, and preference

d.

Price elasticity, scarcity, and cost maximization

ANS: B

The three principles upon which the study of economics is based are scarcity (resources exist in specific finite quantities and the consumption demand is generally greater than the supply), choice (decisions are made about which commodities or resources to select and produce), and preference (individual and societal influence impact which items or services are preferred and which are not).

PTS: 1 DIF: Comprehension REF: INTRODUCTION

2. The concept of _____ does not work well when applied to health care because the general rule that when the price of an item or service goes up, the demand goes down does not necessarily impact the publics demand for (or belief in their right to obtain) this item or service.

a.

Price elasticity

c.

Economics

b.

Scarcity

d.

Cost maximization

ANS: A

Price elasticity refers to the price that a person is willing to pay for any given item. The general rule states that when the cost of an item or service goes up, its demand goes down; however, this principle does not always apply when dealing with health care issues due to the publics belief that they are entitled to the best available health care, state-of-the-art treatments, and innovative new techniques and medications, many of which are expensive due to their newness and the overhead to produce them.

PTS: 1 DIF: Comprehension REF: INTRODUCTION

3. A nurse educator evaluates the students understanding of the current factors influencing health care reform. Which response by a student would indicate that further teaching is required?

a.

Interest groups

c.

Altruism

b.

Political ideology

d.

Policy entrepreneurs

ANS: C

Further teaching is necessary if a student responded, Altruism. While a long-standing tradition of health care focused on altruism (the unselfish concern or dedication to the care of the sick), current factors influencing health care reform are interest groups, political ideology, and policy entrepreneurs.

PTS: 1 DIF: Analysis

REF: TRADITIONAL PERSPECTIVE ON THE COST OF HEALTH CARE

4. A nurse manager recognizes that methods used to account for the cost of health care expenditure include which of the following?

a.

Regression analysis, flowcharts, and relative value points

b.

Patient classification systems, regression analysis, and flowcharts

c.

Relative value units, regression analysis, and patient classification systems

d.

Relative value points, process improvement, and quality management

ANS: C

The use of certain processes can help to simplify and standardize the cost of health care expenditures such as the cost of nursing care. Some of these processes are relative value units (RVU), patient classification systems (PCS), and regression analysis.

PTS: 1 DIF: Application REF: KEY CONCEPTS

5. An instructor wants to determine whether a nursing student knows during which era the cost of health care began to be questioned. Which response by the student would indicate that the student knows?

a.

1940s

c.

1960s

b.

1950s

d.

1990s

ANS: C

Prior to the 1960s, it was assumed that all Americans were entitled to all of the health care knowledge, skills, and treatments available no matter what the cost. Expenditures for health care escalated upwards and, in an attempt to control these costs, the U.S. government enacted Titles XVIII and XIX in 1965. Titles XVIII and XIX were amendments to the Social Security Act (Medicare and Medicaid programs). They were designed to require health care providers to provide documentation of care for Medicare and Medicaid patients.

PTS: 1 DIF: Application REF: RIGHT HEALTH CARE AT ANY COST

6. During an in-service training, the speaker evaluates the attendees knowledge of the term cost plus. Which response by the attendees indicates they understand?

a.

An international discount store

b.

The amount of monies spent on health care plus the current inflation factor

c.

The cost to the provider plus a profit incentive for being in business

d.

The expenditure for being in the health care business plus benefits from pharmaceutical companies

ANS: C

As health care expenditures continued to escalate upward, the concept of cost plus became the way to determine the expenditure involved with service delivery. The actual cost (expenditure) the provider incurred for care plus a profit incentive for being in business became known as cost plus. The emphasis here was not on how services could be delivered economically, but the more you spend, the more you get.

PTS: 1 DIF: Application REF: COST PLUS

7. A newly hired staff nurse understands that the organizations vision statement provides which goals for the organization?

a.

Short-term

c.

Short-term and long-term

b.

Long-term

d.

Anticipated, short-term, and long-term

ANS: B

The vision statement logically extends the mission statement into the future by establishing long-range or long-term goals for the organization. The mission provides the initial purpose for the existence of the company and the rationale that justifies that existence.

PTS: 1 DIF: Application

REF: THE COST EQUATION: MONEY = MISSION = MONEY

8. A local hospital has no stockholders. This type of organization is most likely:

a.

for-profit.

c.

monopoly.

b.

not-for-profit.

d.

fiefdom.

ANS: B

Not-for-profit businesses do not have shareholders to share in their successes and profits. All of the profits are channeled directly back into the business for its maintenance and growth. For-profit businesses distribute a certain portion or percentage of their profits to their stockholders as appreciation for their fiscal investment in the company.

PTS: 1 DIF: Comprehension REF: BUSINESS PROFIT

9. Nurses should be familiar with the concept of ethics and understand that it represents the concern for which of the following?

a.

Others instead of oneself

b.

Oneself instead of others

c.

The general welfare of society as the proper goal of actions

d.

The welfare of the individual as opposed to groups as the proper goal of actions

ANS: C

Ethical behaviors and actions relate to the general welfare of society instead of primarily oneself (egoism) or the unselfish concern for the welfare of others (altruism).

PTS: 1 DIF: Application

REF: TRADITIONAL PERSPECTIVE ON THE COST OF HEALTH CARE

10. An accountant at the local hospital would understand that which of the following government organizations is responsible for the administration of Medicare and Medicaid?

a.

Health Care Financing Administration (HCFA)

b.

Social Security Department

c.

Tax Equity and Fiscal Responsibility Act (TEFRA)

d.

Congress

ANS: A

It is the responsibility of the Health Care Financing Administration (HCFA) to administer and oversee the Medicare and Medicaid programs. In 1982, the Tax Equity and Fiscal Responsibility Act (TEFRA) went into effect as a means of establishing new payment regulations in an attempt to reduce the increasing governmental expenditure for these programs.

PTS: 1 DIF: Application

REF: CONTEMPORARY PERSPECTIVES ON COST OF HEALTH CARE: HEALTH CARE AS A BUSINESS

11. A client is seen at the local health center where a flat rate of payment up front is required, instead of reimbursing the health care providers cost. The client is most likely using which form of payment?

a.

Pay for performance

c.

Cost plus

b.

Prospective payment system

d.

Selective payment

ANS: B

The Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 changed the way in which health care providers were paid for their services to Medicare and Medicaid patients. This new payment system is called prospective payment, and it reimburses the provider a flat rate that was stated up front instead of reimbursing for the actual cost of services rendered.

PTS: 1 DIF: Application

REF: CONTEMPORARY PERSPECTIVES ON COST OF HEALTH CARE: HEALTH CARE AS A BUSINESS

12. Which of the following was initiated to help ensure that the quality and safety of care was not compromised?

a.

CQI

c.

TEFRA

b.

HSA

d.

PPO

ANS: A

With the increase of monitoring and accountability for health care expenditure and the decrease of available services per health care dollar, attention to the quality and safety of the care given arose. Programs such as continuous quality improvement (CQI) and total quality improvement (TQI) were begun to help assure society that these cost management efforts were not compromising care.

PTS: 1 DIF: Comprehension

REF: NEED FOR HEALTH CARE DETERMINED BY THE CONSUMER

13. High Risk Pool plans are:

a.

a way to save money and get a tax deduction.

b.

an incentive to shop for cost-effective health care services.

c.

a branch of the U.S. government that deals with health and health services.

d.

plans for patients previously refused insurance due to preexisting health care conditions.

ANS: D

State-administered High Risk Pool plans are for patients previously refused insurance due to preexisting health conditions; they provide affordable health care insurance for 45 million uninsured Americans. These uninsured persons can either choose a government-run insurance plan or they can choose from private insurance plans.

PTS: 1 DIF: Comprehension

REF: NEED FOR HEALTH CARE DETERMINED BY THE CONSUMER

14. Which of the following emerged as the answer to cost-efficient quality care?

a.

Health care savings plan

c.

Managed care

b.

Evidence-based care

d.

Planned parenthood

ANS: C

Managed care emerged as the answer to cost-efficient quality care. The managed care model was generated from market (public) response to the curbing of services brought about in response to regulatory and governmental monitoring and restrictions of services such as those found in Medicare and Medicaid programs.

PTS: 1 DIF: Knowledge REF: MANAGED CARE

15. A for-profit brokerage company that acts as an agent who negotiates for a contract regarding how and when the provision of health care services will be accomplished is called:

a.

Medicare.

c.

integrated health care system.

b.

health service organization.

d.

managed care.

ANS: D

The above definition of managed care is not particularly positive or altruistic, but it does provide the basic tenets of the model. It is a business. It is for profit. It does negotiate contracts for care. The rationing of the care provided is a side effect of this health care model.

PTS: 1 DIF: Comprehension REF: MANAGED CARE

16. Prompt access to diagnostic and treatment services, ready availability of state-of-the-art and cutting-edge technology, and participation in health care decisions are examples of American:

a.

rights.

c.

qualities of life.

b.

entitlements.

d.

values.

ANS: C

When it comes to health care choices, Americans tend to value certain quality-of-life enhancers such as prompt access to diagnostic and treatment services, ready availability of state-of-the-art and cutting-edge technology, and participation in health care decisions, to name a few. While some people believe that merely living in the United States entitles them to such services and choices, this is not necessarily the legal reality or most rational behavior.

PTS: 1 DIF: Analysis REF: UNIVERSAL HEALTH CARE

17. Three of the six interventions to help reduce morbidity and mortality in the United States developed by the Institute for Healthcare Improvement (IHI) are:

a.

deploying rapid response teams, improving the care for myocardial infarctions, and employing time outs.

b.

promoting medication reconciliation, preventing central line infections, and using the SBAR technique.

c.

preventing ventilator-assisted pneumonia, deploying rapid response teams, and promoting medication reconciliation.

d.

preventing surgical site infections, using the SBAR technique, and deploying rapid response teams.

ANS: C

The six interventions developed by the IHI as part of their 100,000 Lives Campaign to reduce patient morbidity and mortality are: preventing ventilator-assisted pneumonia, deploying rapid response teams, promoting medication reconciliation, improving the care of patients with myocardial infarction, preventing central line infections, and preventing surgical site infections.

PTS: 1 DIF: Comprehension

REF: THE INSTITUTE FOR HEALTHCARE IMPROVEMENT

18. Which of the following are tools the nurse manager can use when developing a budget?

a.

High-low cost estimation, regression analysis, and break-even analysis

b.

Regression analysis, break-even analysis, and t-test

c.

Break-even analysis, high-low cost estimation, and balanced scorecard

d.

T-test, balanced scorecard, and regression analysis

ANS: A

Budget planning involves developing a formal quantitative plan for acquiring and distributing funds over a specified period of time by utilizing some means of cost prediction. Tools that are useful to this process are high-low cost estimation (good for measuring the cost of items that tend to remain relatively constant), regression analysis (examines all available cost information over a period of time), and break-even analysis (helps to predict the volume of services that must be provided for the overhead of these services to be evenly matched by the payment received without either a profit or loss).

PTS: 1 DIF: Application REF: COST ANALYSIS

19. Some methods of identifying nursing costs such as direct patient care, indirect patient care, coordinating discharges, documentation, and critical problem solving are:

a.

patient classification systems (PCS).

c.

quality measurement (QM).

b.

relative value models (RVM).

d.

process improvement (PI).

ANS: A

Patient classification systems (PCS) are the most widely used method for identifying nursing costs as they differentiate patients according to their acuity, functional ability, or resource needs. This tool was originally used to determine staffing needs, but it has since been utilized to help predict potential cost and expenditure.

PTS: 1 DIF: Comprehension

REF: PATIENT CLASSIFICATION SYSTEMS (PCS)

20. The nurse manager understands that the cost in a budget that exists regardless of the number of patients for whom care is provided would be considered which of the following?

a.

Fixed costs

c.

Annual costs

b.

Variable costs

d.

Supplemental costs

ANS: A

Fixed costs exist regardless of the number of patients for whom care is provided. Variable costs vary with volume and will increase or decrease depending on the number of patients.

PTS: 1 DIF: Application REF: FUNDAMENTAL COSTS

21. The nurse understands that the term Failure to Rescue refers to which of the following?

a.

An organizations inability to avoid bankruptcy due to lack of funds

b.

The physicians inability to provide adequate support to nurses experiencing burnout

c.

The clinicians inability to save a patients life when the patient experiences complications

d.

The nurses inability to provide overtime services when the ward is short-staffed

ANS: C

Failure to Rescue describes the clinicians inability to save a patients life when the patient experiences complications. Rapid-response teams have been developed to rescue the patient by mobilizing hospital resources quickly, including bringing nursing and medical practitioners and nurses to the bedside when a patients condition deteriorates.

PTS: 1 DIF: Comprehension

REF: RAPID-RESPONSE TEAM DEVELOPMENT TO PREVENT FAILURE TO RESCUE

22. A hospital administrator is trying to determine whether a new piece of equipment should be ordered for the Intensive Care Unit (ICU). Because the hospital has been experiencing some financial problems, a good approach for the administrator to use would be to do which of the following?

a.

Examine the break-even point

b.

Terminate several employees and use the extra salaries to purchase the equipment

c.

Purchase the equipment and hope for the best

d.

Ask the employees to donate a days pay toward the purchase price

ANS: A

The break-even point is the point at which income and expenses are equal.

PTS: 1 DIF: Analysis REF: BREAK-EVEN ANALYSIS

23. Which of the following patient care units would require the largest number of nurses if the scale used to measure acuity ranged from 1-5, with the highest acuity being 5?

a.

A unit with10 patients, all ranked acuity level 5

b.

A unit with 15 patients, 5 with acuity level 4 and 10 with acuity level 2

c.

A unit with 20 patients , 2 ranked acuity level 5, 2 ranked acuity level 3, and 17 ranked acuity level 1-2

d.

A unit with 25 patients, all ranked as acuity level 1-2

ANS: A

The unit with 10 patients, all ranked acuity level 5 would require the most nurses. Because acuity level 5 patients would require a 1:1 or 1:2 nurse-to-patient ratio, this unit would need from 5 to 10 nurses. An example of this type of unit might be one of the Intensive Care Units.

PTS: 1 DIF: Analysis REF: PATIENT CLASSIFICATION SYSTEMS (PCS)

24. The intensification of the focus on cost and quality improvement and the expansion from hospitals to diverse ambulatory and home care sites is being referred to as which of the following?

a.

20th century revolution

c.

Q-revolution

b.

Internet revolution

d.

Transition revolution

ANS: C

Q-revolution refers to the recent intensification of the focus on cost and quality improvement and its expansion from hospitals to diverse ambulatory and home care sites. The more critical cost containment and cost management become, the more critical attention to quality management becomes. Quality and cost are inextricably linked.

PTS: 1 DIF: Comprehension

REF: QUALITY MEASUREMENT

MULTIPLE RESPONSE

1. Which of the following would be considered direct costs in a nurse managers budget? Select all that apply.

a.

Nurses salaries

d.

Heating cost

b.

Maintenance costs

e.

Cost for air conditioning

c.

Patient care supplies

f.

Utility costs such as electricity

ANS: A, C

Nurses salaries and patient care supplies are considered direct cost. Maintenance cost, heating, air conditioning, and electricity costs are all indirect costs.

PTS: 1 DIF: Application REF: FUNDAMENTAL COSTS

2. In preventing infection of a central line, the nurse must perform which of the following hand hygiene protocols? Select all that apply.

a.

Between each patient

b.

Before, but not after, palpating catheter insertion site

c.

Only when hands are obviously soiled

d.

After using the bathroom

e.

Before and after palpating catheter insertion site

f.

Before and after invasive procedures

ANS: A, D, E, F

Hand hygiene should be performed: before and after palpating catheter insertion site, before and after invasive procedure, and before and after donning gloves. In addition, hand hygiene must be performed between patients, after using the bathroom, and when hands are soiled.

PTS: 1 DIF: Application REF: CENTRAL LINE BUNDLE

3. A client is to have a central line inserted. According to the Institute for Health Improvement, which of the following are required? Select all that apply.

a.

Cap

d.

Shoe covers

b.

Mask

e.

Suction equipment

c.

Clean gloves

f.

Large sterile drape

ANS: A, B, F

According to the Institute for Health Improvement, when inserting a central line, a cap, mask, sterile gloves, and a large sterile drape to cover the patient are required. Sterile instead of clean gloves are required. Shoe covers and suction equipment are not mentioned.

PTS: 1 DIF: Application

REF: THE INSTITUTE OF HEALTHCARE IMPROVEMENT

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