Financial Stewardship Flashcards

A hospital's facilities department spent $180,000 on emergency repairs last year compared to a $50,000 annual average over the prior five years. What financial root-cause analysis should the manager perform first?

Answer: Analyze whether the PM compliance rate dropped and which systems generated the emergency calls

Correlating the spike in emergency repair costs with PM compliance rates and specific failing systems identifies whether inadequate preventive maintenance is the underlying financial driver.

Under ASHE financial stewardship principles, what is the recommended approach when actual maintenance expenditures consistently fall significantly below budget?

Answer: Investigate whether necessary PM tasks are being deferred, creating future liability

Consistently underspending on maintenance often signals deferred work that creates future costly failures; stewards must investigate rather than simply celebrate budget savings.

A healthcare system is implementing an Integrated Workplace Management System (IWMS). What is the primary financial benefit expected from this technology investment?

Answer: Improved asset data quality enabling better capital planning, cost tracking, and labor optimization

An IWMS centralizes asset, work order, and cost data, enabling more accurate capital planning, granular cost tracking, and labor productivity optimization across the facility.

A hospital CFO requests that the facilities director present the annual maintenance budget using cost-per-square-foot metrics. The building is 350,000 GSF with a $3.5 million maintenance budget. What is the annual maintenance cost per GSF?

Answer: $10.00 per GSF

$3,500,000 ÷ 350,000 GSF = $10.00 per GSF, a standard metric for benchmarking facilities maintenance costs against industry peers.

Which federally mandated accounting standard most directly affects how nonprofit hospitals report the financial condition of their physical plant on Form 990?

Answer: FASB ASC 958 — Not-for-Profit Entities

FASB ASC 958 governs financial reporting for not-for-profit entities, including how nonprofit hospitals report fixed assets, depreciation, and net asset classifications on Form 990.

A facilities manager is asked to calculate the return on investment (ROI) for a $200,000 roof replacement that prevented $80,000 in annual water damage repairs. What is the simple ROI after three years?

Answer: 20%

Three years of avoided repairs = $240,000; net gain = $240,000 − $200,000 = $40,000; ROI = $40,000 / $200,000 × 100 = 20%.

Which financial risk is most commonly associated with a healthcare facility that delays replacing aging central plant infrastructure beyond its design life?

Answer: Catastrophic failure risk resulting in unbudgeted emergency replacement costs and potential patient care disruption

Operating infrastructure beyond design life exponentially increases the probability of catastrophic failure, generating unplanned emergency replacement costs and potential revenue loss from care disruptions.