5. What is considered an ideal cost structure for each of the following types of reimbursement environments to increase profitability?

  • Fee for service (volume-based)
  • Capitation (member-based)

6. Provide an example of each of the following types of financial ratios and briefly explain/interpret the meaning for each:

  • Profitability ratio
  • Liquidity ratio
  • Debt management ratio
  • Asset management ratio

7. For each of the following questions, identify which of the four categories of financial ratios (see question 6) is best used to answer each one:

  • Can the organization afford to borrow more money to finance a planned service line expansion?
  • How efficiently is the organization making use of its existing plant and equipment?
  • Can the organization effectively meet its short-term obligations?
  • How effective is the organization at generating a positive return to support its current operations?