National Association of Boards of Long Term Care Administrator (NAB) CORE Practice Exam

If overall revenue declines and census remains stable, which financial area should be reviewed?

1. Balance depreciation

2. Asset allocation

3. Ancillary revenue

4. Interest income revenue

The correct answer is: Ancillary revenue

When overall revenue declines while the census remains stable, it suggests that the organization may not be maximizing its potential income sources effectively. In this case, reviewing ancillary revenue is essential because it comprises all the additional services or products offered beyond the primary services provided to residents, such as therapy services, pharmacy services, and social activities that could enhance the financial performance. Analyzing ancillary revenue allows administrators to identify areas where services could be expanded, promoted more effectively, or even restructured to generate additional income. Since the census has not changed, the potential for increased revenue lies in optimizing these additional revenue streams rather than relying solely on the primary operational income, which is generally linked to the resident count. Other financial areas like balance depreciation, asset allocation, and interest income revenue may not directly relate to the immediate situation of declining revenue with a stable census, making them less relevant for review in this context. By focusing on ancillary revenue, administrators can strategically enhance the financial health of the organization despite the challenges indicated by declining overall revenue.