Question

True or False

Pro Forma financial statements use the information contained in management’s operating and capital budgets as well as management’s projections of the revenue and expense conditions for the future to estimate the hospital’s financial condition over time.

It is generally more expensive for hospital managers to make adjustments in the existing outlay of costs when they have more time to do so, i.e. in the long run, rather than in the short-run.

When comparing accounting vs. economic costs, the major disadvantage of using accounting costs is that they will always predict lower costs per surgery on those days when the number of surgeries is higher than expected. In reality this is not true, however, as every deviation from the planned level of operation raises costs, such as payment of overtime, extra expenses when hiring temps, cost of rush ordering of exhausted supplies, etc.

Increasing demand for long-term care is associated with macroeconomic and demographic trends as well as individual life style choices. For instance, higher workforce participation by women has raised the opportunity cost of care giving.

Home health care providers meet only functional and social needs of patients.

Medicare accounts for more than half of all nursing home funding.

Originally, Medicaid has been created to provide medical insurance for indigent women and children. Now, however, the majority of Medicaid expenditures are for the elderly.

Middle and low income taxpayers benefit from several federal tax incentives to buy long term care insurance.

More than 10% of U.S. health care spending goes to nursing homes.

In the market for nursing home services, after reaching the quantity where the private market’s willingness-to-pay matches the Medicaid reimbursement rate, demand becomes essentially perfectly elastic at the Medicaid reimbursement rate, as all remaining beds can typically be filled with Medicaid patients.