ACHE BOG Exam Sample Test, Exams of Business Administration

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ACHE BOG Exam Sample Test

| 100 Questions and Answers

CEO Compensation should be based on: the compensation arrangement with prior CEO executive compensation in local corporations with similar gross revenues present day salary plus cost-of living adjustment what the institution would have to pay for a similarly prepared person if that person were employed elsewhere Correct Ans ➡ d. what the institution would have to pay for a similarly prepared person if that person were employed elsewhere An essential function of the governing board is to: approve the mission, vision, and long-range plan focus on strategic planning prepare the operating plan review the performance of departmental managers Correct Ans ➡ a. approve the mission, vision, and long-range plan The key to enhancing board effectiveness is: getting the right people to serve on the board supporting and selecting the right CEO orientating and training the CEO organizing the board's work Correct Ans ➡ d. organizing the board's work Members of the medical staff are eligible for full membership on the governing board in the same manner as other individuals:

decides which personnel are needed in top management establishes guidelines and makes final choices among competing opportunities Correct Ans ➡ d. establishes guidelines and makes final choices among competing opportunities The individual or group responsible for establishing policy, maintaining quality of care, and providing for institutional management planning is the: COO Medical Staff Medical Committee Governing Body CEOCorrect Ans ➡ c. Governing Body A correct statement regarding trustee serving as fiduciaries is that they can: be indicted for alleged theft of facility funds and improper expenditures of facility funds for personal reasons. be released from responsibility by giving the audit committee final authority in high risk areas of financial matters, without any action by the whole board be held personally liable for wrongful acts or omissions by corporate officers or co-trustees by virtue of their position as trustees waive their fiduciary responsibility as a community organization Correct Ans ➡ a. be indicted for alleged theft of facility funds and improper expenditures of facility funds for personal reasons.

Ultimate responsibility for the mission statement rests with the: CEO and medical staff Governing Board Community and CEO CEOCorrect Ans ➡ b. Governing Board A key reason for choosing board members is because: other board members want to listen to their opinions. of what they can do for the organization have high status in the community c. physicians will listen to them they canCorrect Ans ➡ b. of what they can do for the organization The bylaws of healthcare organization should include which of the following? Committee scope and function The privileges of the medical staff The names of the stockholders in the organization c. Composition of the governing board, committee, and officers Correct Ans ➡ c. Composition of the governing board, committee, and officers Successful approaches to strategic planning include:

avoidance of high risk decision not paying attention to competitor's activity using rules and past experiences as a guide to future action Correct Ans ➡ a. a well-written mission statement, long-range plane, and fiscal plan plus the history and discussion surrounding them The primary challenge facing a prospector is: protecting and increasing current services (product) or market share through technical efficiency, cost improvements, or differentiation strategies managing diversification successfully, to guard against expanding too rapidly or into areas they have little knowledge managing simultaneously the difficult task of pursuing new markets and services while avoiding erosion of current services in existing markets creating stability by sticking with strategic plan long enough to accumulate experience and to develop consistent leadership avoiding random diversification efforts. Correct Ans ➡ b. managing diversification successfully, to guard against expanding too rapidly or into areas they have little knowledge In the introductory stage of a product life cycle: the introductory stage can be short the introductory stage can be long sales and revenue growth is slow c. all of the above Correct Ans ➡ c. all of the above The primary task of marketing is to:

bring about voluntary and involuntary exchanges of value attract new advertiser bring about exchanges of values advertise new and existing services Correct Ans ➡ c. bring about exchanges of values It would be incorrect to say that: an organization's image is a function of all that the organization has done as well as what it has attempted to communicate people's images of an organization always reflects their true attitudes toward the organization an organization's image is largely the result of public relations, advertising, selling, and communication efforts. responsibility for the creation of the organization's image does not lie merely with the marketer Correct Ans ➡ c. an organization's image is largely the result of public relations, advertising, selling, and communication efforts.

performance of an environmental assessment c.estimation of a competitor's current customer base d. estimate of future demand by "middlemen" Correct Ans ➡ c. estimation of a competitor's current customer base All of the following statements are true except that: much of the art of forecasting relies on the opinions of experts forecasting, if correctly performed relying on technological forecasting approaches, is an exact science forecasting includes applying the rates of anticipated future change to the current status to predict the future qualitative date are often used in developing assumptions on which quantitative forecasting can be constructed Correct Ans ➡ b. forecasting, if correctly performed relying on technological forecasting approaches, is an exact science Which of the following environmental assumptions for the next decade is not reasonable? Cost containment pressures will continue to be a dominate factor in the delivery of health services There will be decreased morbidity (substance abuse, violence, accidents, etc.) Continued growth in new technologies will focus on cost -saving technologies that move care from inpatient settings to out -of-hospital settings.

There will be continuing efforts to measure and assure quality of healthcare services. Correct Ans ➡ b. There will be decreased morbidity (substance abuse, violence, accidents, etc.) Of the following advertising media, which of the potentially has the maximum selectivity in reaching defined target audience? Local radio Direct mail Network TV Outdoor advertising Correct Ans ➡ b. Direct mail The major value of job analysis is that it is: used to establish wage levels The best method for identifying the need for employees the cornerstone of human resources management activities valid for a long period of time. Correct Ans ➡ c. the cornerstone of human resources management activities Comparative methods of performance appraisal that compares one manager to another to determine performance ratings: are solely based on desired organizational outcomes are times consuming and useful only for relatively small groups of employees

smoothing bargaining integrative problem solving appealing to superordinate goals Correct Ans ➡ a. smoothing Work groups informally govern the amount and quality of work of individuals within the group through: performance norms behavior norms standard operation procedures job description Correct Ans ➡ a. performance norms As a minimum, an organization demonstrates "good faith" in collective bargaining with a union by: appointing a representative who may not have the power to negotiate agreements to meet with the union rejection union proposals without having to offer counterproposals. bargaining individually with employees or offering them individual contracts even though bargaining has been requested by the majority representative receiving union proposals and meeting with the union from time to time to discuss the proposals Correct Ans ➡ d. receiving union proposals and meeting with the union from time to time to discuss the proposals

Large, multidisciplinary work groups with health services organizations are likely to suffer from: "groupthink" when individuals strive toward harmony and unanimity at the expense of good decision making. "free-riding" when individuals can benefit from the work of the group without making a suitable contribution "risky shift" when individuals ignore potentially dangerous outcomes and choose high-risk alternatives "behavioral transference" when values and norms of other work groups are discounted Correct Ans ➡ b. "free-riding" when individuals can benefit from the work of the group without making a suitable contribution The major benefit of integrative dimension of negotiation over the distributive dimension is that the: value of the Best Alternative to a Negotiated Agreement is increased value of the Best alternative to a Negotiated Agreement is decreased complexity of the negotiation process is simplified amount of resources to be distributed is increased, allowing both parties to reach their reservation prices Correct Ans ➡ d. amount of resources to be distributed is increased, allowing both parties to reach their reservation prices

equal to the discounted rate used in the calculation equal to the accounting profit averaged over the life of the investment. Correct Ans ➡ a. decision on which of the proposed capital projects will be funded For information on net cash flow from providing health services for a specific time frame, the decision maker should use the: statement of cash flow income statement balance sheet statement of retained earnings Correct Ans ➡ a. statement of cash flow Memorial Hospital offers a screening test as a public service for $.50 per test. Variable cost per unit are $.32. Fixed cost are $43,200 per month for the department performing the test. It is the only test done by this special department. the break-even point in the test is: 240,000 tests 172,800 tests 135, 000 tests d. 86,400 tests Correct Ans ➡ a. 240,000 tests (. -.32 =. 18) (.18/43200 = 240,000)

The most important factor in the success of the organizational internal control system is: selection of the internal auditor selection of the CEO selection of certified public accountants for internal auditor functions selection of the audit committee of the board Correct Ans ➡ a. selection of the internal auditor Hampton Outpatient budgeted revenue from flu vaccinations at $20 per shot. Fixed cost total $5 per unit dose on 4,000 shots and remain unchanged within a relevant range of 1,500 shots to 6,400 shots. Variable cost of $10 per shot. After total revenue was budgets at $70,000, the clinic received a request from the local school district for flu vaccinations for its 1,000 students at a reasonable cost. If Hampton Clinic wants to increase operating income by $2,000, what should Hampton charge for additional shots. The variable cost plus the incremental profit margin per shot. The average cost per sot plus the per-unit profit The fixed cost per shot plus the variable cost. The variable costs plus the per-unit fixed cost. Correct Ans ➡ a. The variable cost plus the incremental profit margin per shot. Financial risk is an element in capital investment decisions and is determined by:

weighted average required rate of return adjusted downward in accordance with GAAP correct discount rate valuing total cash flows received by equity suppliers Correct Ans ➡ b. economic cost to the organization of producing all required returns to capital In general, the net present value calculation assume: the discount rate is constant over the life of the decision. the organization is a for profit entity future cash flows are known with certainty. borrowing and lending rates are equal with each period Correct Ans ➡ d. borrowing and lending rates are equal with each period The difference between an accounting break-even point and an economic break-even point is that: the economic break-even point provides the required rate of return to all suppliers of capital to the provider the economic break-even point does not recognize expense category the accounting break-even point provide s for total financial requirements there is no difference Correct Ans ➡ a. the economic break-even point provides the required rate of return to all suppliers of capital to the provider Under the capitation, the risks of over-utilization are shifted to the:

patient receiving the health service provider of the health service third party payors health insurance company Correct Ans ➡ b. provider of the health service Which of the following ratios would be used to estimate cask flow for a specific time period: Receivable balance TO Average daily revenue for period Net Account receivable TO Gross account receivables Cash collected during period TO Revenue for period Deduction from revenue TO Gross revenue for period Correct Ans ➡ c. Cash collected during period TO Revenue for period In developing workload measurements for estimating manpower requirements for budget preparation, the analyst should first: develop relative units for each cost center predict payor mix for the budget year determine available staff for each department d. forecast total admissions activity levels and patient days Correct Ans ➡ d. forecast total admissions activity levels and patient days