② Free E-Dictionary of Health Economics and Finance

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Medical economics and finance is an integral component of the health care industrial complex. Its language is a diverse and broad-based concept covering many other industries: accounting, insurance, mathematics and statistics, public health, provider recruitment and retention, Medicare, health policy, forecasting, aging and long-term care, are all commingled arenas.

The Dictionary of Health Economics and Finance will be an essential tool for doctors, nurses and clinicians, benefits managers, executives and health care administrators, as well as graduate students and patients. With more than 5,000 definitions, 3,000 abbreviations and acronyms, and a 2,000 item oeuvre of resources, readings, and nomenclature derivatives. It covers the financial and economics language of every health care industry sector.

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ABANDONMENT: To willfully give up all rights and claims to assets.

ABSOLUTE ADVANTAGE: The advantage a healthcare entity has over another similar healthcare entity, if it can produce more healthcare units over a certain period of time, all inputs being equal.

Absolute volatility: The true volatility of an investment.

ABSORBED: A healthcare cost that is treated as an expense rather than transferred to the patient or third party payer.

ABSORPTION COSTING: Cost accounting method that assigns both variable and fixed costs to healthcare products and services.

Accelerated cost recovery system (ACRS):  The predecessor of modified ACRS (MACRS). A depreciation method in which the cost of tangible property like a MRI machine or CT scanner that is recovered over a determined period of time. This approach disregards salvage value, imposes a period of cost recovery that depends on the classification of the asset into one of various recovery periods, and determines the applicable percentage of cost that can be deducted each year.

ACCELERATED DEPRECIATION: A method of loss recovery in which larger portions of depreciation are taken in the beginning periods of asset life, and smaller portions taken in later years.

ACCELERATED DERECIATION ALLOWANCES: The deduction from pre-tax healthcare business entity income that is allowed when the company purchases new plants or equipment.

ACCELERATED PAYMENT: The partial advancement of funds to temporarily pay for delayed healthcare claims, human resource payrolls, or other business or corporate claims.

ACCELERATION CLAUSE: Any clause, term or condition on a bond, debt, or loan that allows immediate principal payment on-demand if other agreements are not met.

ACCESS FEE: The managed care or healthcare insurance plan fee to access its panel of member medical providers. 

ACCOUNT: A detailed record of the changes in assets, liabilities and equity for a given period; a contractual relationship between a seller (healthcare provider) and buyer (patient, third party, insurance company, etc).

ACCOUNT BALANCE: A statement net of credits and debits at the end of an accounting reporting period.

ACCOUNT RECONCILIATION: Adjusting a balance to match a bank statement.ACCOUNTABILITY: Subject to accounting, civil and legal responsibilities and liabilities for Generally Accepted Accounting Principles (GAAP), American Institute of Certified Public Accounting (AICPA) and other rules of conduct.

ACCOUNTANT’S OPINION: Signed statement by an independent accountant which describes the nature, purpose, scope and outcome of an examination of a healthcare entity’s books, taxes and financial records.

ACCOUNTING: A formal professional system that gathers processes and presents financial information in report form to corporate management, and/or state and federal tax authorities, as needed.

ACCOUNTING COST: A measure of healthcare entity operating input costs; the explicit costs of operating a business.

ACCOUNTING CYCLE: The process by which financial statements are produced for a given period.

ACCOUNTING EQUATION: Assets equal liabilities plus owner’s (stockholder’s) equity.

ACCOUNTING PERIOD: A calendar month, quarter, cycle or year between accounting periods.

ACCOUNTING PRINCIPLES BOARD: Board of the American Institute of Certified Public Accountant’s (AICPA) which issued what is traditionally known as the Generally Accepted Accounting Principles (GAAP) from 1959-1973.

ACCOUNTS PAYABLE: The amount of money a healthcare organization is obligated to pay vendors. A liability backed by general reputation and credit of the debtor.

ACCOUNTS RECEIVABLE: The amount of money a healthcare organization is due from insured patients, payers, vendors or other sources.

ACCOUNTS RECEIVABLE INSURANCE: Insurance coverage for uncollected accounts, plus the expenses of record reconstruction and various other collection fees, but sans the physical, paper or electronic devices, computer disks or tapes or memory sticks.

accounts receivable turnover: The speed in which accounts receivable are converted to cash. The ratio of net credit sales to average net accounts receivable.

ACCREDITED INVESTOR: Rule 501 of Regulation D of the Securities Act of 1933, requires a natural person whose individual net worth, or joint net worth together with a spouse, exceeds $1,000,000. Alternatively, under the same rule, an accredited investor is a natural person with an individual income in excess of $200,000 in each of the two most recent years or joint income with a spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year. Such investors are often used in private placements for healthcare facility bonds and securities.

ACCRETION: Difference between bond price at original discount purchase and current par value; asset increase through internal growth and expansion.

ACCRETION OF A DISCOUNT: An accounting process by which the book value of a security purchased at a discount from par is increased during the security’s holding period. The accretion reflects the increase in the security’s holding value as it approaches the redemption date. Under a “straight line” accretion method, the yearly accretion is the same for all years, and is equal to the product of the total amount of the discount divided by the number of years to redemption.

Accrual: The amount of money that is set aside to cover expenses. Accrual is the best estimate of what those expenses are, and is based on a combination of input data.

accrual basis of accounting: A method of accounting which attempts to match health entity revenues with expenses and claims by recognizing revenue when a service is rendered and expense when the liability is incurred irrespective of the receipt or disbursement of cash.

ACCRURAL BONDS: Also known as zero coupon bonds; void of regular interest payments until all are due at maturity.

ACCRUE: To accumulate, as in debt or revenue.

accrued assets and liabilities: The accumulation of both assets and liabilities.

ACCRUED EXPENSES: Incurred, but not yet paid, expenses.

Accrued interest: Interest earned, but not received, when a buyer purchases a hospital or other bond (debt) from a bondholder. The buyer owes the bondholder interest for the period of time the bondholder held the bond. Because interest is paid semi-annually, the period of time that has elapsed is the accrual period.

ACCRUED REVENUE: Revenue earned by a healthcare entity but not yet received in cash.

ACCUMULATED DEPRECIATION: The total accumulated amount of depreciation recognized as an asset by a healthcare organization, since purchase.

ACCUMULATED DIVIDEND: Dividends due on cumulative preferred stock not yet paid out.

ACCUMULATION: Total utilized services per dollar, of covered healthcare, medical services or other benefits.

ACCUMULATION ACCOUNT: An account established by the sponsor of a unit investment trust (UIT) into which securities purchased for the portfolio of the trust are placed until they are formally deposited into the endowment fund or trust, and the trust is formally created.

ACCUMULATION PERIOD: Specific time period for incurred expenses that are at least equal to the deductible or similar amount, in order to begin a managed care benefit period.

ACCUMULATION STAGE: Period when contribution are made to an annuity account.

ACCUMULATION UNIT: A unit used to measure the value of the separate account of an annuity during the pay-in (accumulation phase). Similar to a mutual fund share in that this is the value of one unit (i.e., share) in the annuity separate account. Usually valued on a daily basis, and will fluctuate in value based on the performance of the investments chosen or directed into the separate account.

ACID TEST: A business liquidity financial test that measures how much cash and marketable securities are available to pay all current liabilities of the healthcare organization.

acid test ratio: A liquidity ratio that measures how much cash and marketable securities are available to pay all current liabilities of a healthcare business organization. (i.e., cash and marketable securities/current liabilities).

ACQUIRED SURPLUS: Un-capitalized net worth in a pooling-of-interests situation.

ACQUISITION: A corporation that takes controlling interest in another company.

ACQUISITION COST: The cost of soliciting and acquiring patients, managed care insurance contracts, or business interests.

ACTIVE: A currently in-effect status.

ACTIVE MONEY: Currency that is in-circulation.

ACTIVE MARKET: Heavy volume trading in a particular securities or commodities market.

Activity-based Costing (ABC): Defines costs in terms of a healthcare organization’s processes or activities and determines costs associated with significant activities or events. ABC relies on the following three step process: Activity mapping, which involves mapping activities in an illustrated sequence; Activity analysis, which involves defining and assigning a time value to activities; and Bill of activities, which involves generating a cost for each main activity.

Activity-based Management (ABM): Supports health entity operations by focusing on the causes of costs and how costs can be reduced. It assesses cost drivers that directly affect the cost of a product or service, and uses performance measures to evaluate the financial or non-financial benefit an activity provides. By identifying each cost driver and assessing the value the element adds to the healthcare enterprise, ABM provides a basis for selecting areas that can be changed to reduce costs. 

ACTIVITY RATIOS: Financial ratios that measures how effectively a business or healthcare organization is using its assets to produce revenues.

ACTUAL ACQUISITION COST: Net payment after expenses, for provided products, care or health services.

ACTUAL CHARGE: The amount of money a medical provider or healthcare facility submits for payment from a health insurance carrier or insurance company. It is usually more than received.

Actuary: A mathematician or professional person who determines health insurance policy rates, reserves and dividends, as well as conducts various other statistical studies.

Actuarial: Refers to the statistical calculations used to determine rates, prices, fee schedules and/or premiums charged patients based or insurance companies on projections of healthcare utilization and cost for a defined population, segment or cohort.

ACTUARIAL ASSUMPTIONS: A healthcare entity in establishing premiums, fees, rates, charges scheduling policy provisions, and projecting future cost increases, must make certain estimates.  The most important assumptions are based on probabilities of illness, accident and/or death and assumptions about interest and capital gains, as well as sales commissions and other related expenses.

actuarial cost: A cost derived through the use of actuarial present values estimations.

actuarial present value: The current worth of an account payable (AP) or account receivable (AR) in the future, where each such amount is discounted at an assumed rate of interest and adjusted for the probability of its payment or receipt.

actuarially sound: A healthcare business entity is considered to be actuarially sound when the amount of money in the company and the current level of fees, premiums, subscriptions or charges are sufficient to meet the liabilities that have accrued and that are accruing on a current basis.

AD VALOREM: “According to value”; a Latin phrase.

AD-VALOREM TAX: A direct tax calculated “according to value” of property. Such tax is based on an assigned valuation (market or assessed) of real property and, in certain cases, on a valuation of tangible or intangible personal property. In virtually all jurisdictions, the tax is a lien on the property enforceable by seizure and sale of the property. An ad valorem tax is normally the one substantial tax that may be raised or lowered by a local governing body without the sanction of superior levels of government (although general restrictions (i.e., rate limitations) may exist on the exercise of this right); hence, ad valorem taxes often function as the balancing element in local budgets.

ADDITIONAL BONDS TEST: The earnings test that must be satisfied under the provisions of a hospital or other revenue-type bond contract before bonds of an additional issue having the same lien on a pledged revenue source can be issued. Typically, the test would require that historical revenues plus future estimated revenues (in some cases) exceed projected debt service requirements for both the existing issue and the proposed issue by a certain ratio.

ADDITIONAL PAID-IN CAPITAL: Common stock plus donated capital or paid-in- capital excess of par value.

ADEQUATE DISCLOSURE: The inclusion of material items in al consolidated or other financial statements.

ADJUSTABLE RATE: An interest rate that changes according to some defined index (average).

Adjusted Average Per Capita Cost (AAPCC): (1) Actuarial projections of per capita Medicare spending for enrollees in fee-for-service Medicare. Separate AAPCCs are calculated, usually at the county level, for Part A services and Part B services for the aged, disabled, and people with End State Renal Disease (ESRD). Medicare pays risk plans by applying adjustment factors to 95 percent of the Part A and Part B AAPCCs. The adjustment factors reflect differences in Medicare per capita fee-for-service spending related to age, sex, institutional status, Medicaid status, and employment status. (2) A county-level estimate of the average cost incurred by Medicare for each beneficiary in fee for service. Adjustments are made so that the AAPCC represents the level of spending that would occur if each county contained the same mix of beneficiaries. Medicare pays health plans 95 percent of the AAPCC, adjusted for the characteristics of the enrollees in each plan. See Medicare Risk Contract, U.S. Per Capita Cost.

Adjusted Average Charge per Day: The average charge billed by hospitals for one day of care, which is Adjusted Total Charges (ATC) divided by total days of care.

Adjusted Average Charge per Discharge: The average charge billed by hospitals for an inpatient stay (from the day of admission to the day of discharge), which is Adjusted Total Charges (ATC) divided by number of discharges.

ADJUSTED BASIS: The difference between purchase and sale price if any, that determines capital gains profit or loss.

ADJUSTED BOOK VALUE METHOD: Asset approach valuation method where all assets and liabilities are reworked to fair market value.  The book value that results after one or more asset or liability amounts are added, deleted, or changed from the respective book (accounting) amounts of the healthcare or other business entity.

ADJUSTED COVERAGE PER CAPITA COST: Estimate of average monthly healthcare benefits cost, after certain adjustments.

ADJUSTED DEBIT BALANCE: Margin account determination formula, used and required under Regulation T of the Securities Exchange Commission (SEC).

adjusted earnings: Net earnings from healthcare operations, plus the estimated value of additional fees, charges or subscriptions or earnings.

ADJUSTED ENTRIES: end-period accounting entries that assigns revenues and expenses to the periods earned and incurred.

Adjustments for AGI:  Deductions from income to arrive at AGI. Also known as an “above-the-line” deductions Includes ordinary and necessary expenses incurred in a trade or business, half of self-employment tax paid, all alimony paid, certain payments to an IRA, moving expenses, penalty on early withdrawal of savings, Keogh retirement plan and self-employed SEP deductions, and health insurance deduction for self-employed taxpayers. There are no above-the-line deductions for corporations.

Adjusted Gross Income (AGI): An important subtotal that serves as the basis for computing percentage limitations on certain itemized personal deductions (e.g., medical and dental expenses, casualty and theft losses, and miscellaneous itemized deductions): Consists of all income less adjustments to gross income.

adjusted net gain from operations: The net gain from healthcare operations operations, plus the estimated value of increases in the amount of fees and/or the growth in charges or prices during the year.

Adjusted Payment Rate (APR): The Medicare capitated payment to risk-contract HMOs. For a given plan, the APR is determined by adjusting county-level Adjusted Annual Per Capita Cost (AAPCCs) to reflect the relative risks of the health plan’s enrollees.

ADJUSTED TRIAL BALANCE: A list of adjusted balances in ledger accounts, used in financial statement preparation. 

Adjusted Total Charges: Since OSHPD regulations require that hospitals report charges for the last 365 days of a stay; only total charges for a patient who stays more than one year must be adjusted upward (increased) to reflect the entire stay. Thus, for patients staying longer than one year, the average daily charge for the last year of the stay is calculated and applied to the entire stay. The formula is: (Total Charges divided by 365 = Charge per Day) x Length of Stay = Adjusted Total Charges.

Administrative Costs: All expenses related to utilization review, insurance marketing, medical underwriting, agents’ commissions, premium collection, claims processing, insurer profit, quality assurance programs, and risk management. Administrative costs include the costs assumed by a healthcare entity for administrative services such as billing and overhead costs.

ADMINISTRATIVE COST CENTERS: Healthcare organizational support units responsible for their own costs.

ADMINISTRATIVE PROFIT CENTERS: Healthcare organizational support units responsible for their own profits or fund raising.

ADV: A two-part form filed by investment advisors who register with the Securities and Exchange Commission (SEC), as required under the Investment Advisers Act. ADV Part II information must be provided to potential investors and made available to current investors.

Advance / decline ratio (A/D ratio): The number of stocks that have advanced divided by the number that declined over a certain time period. Ratios plotted one after another show the direction of the market, and the steepness of the line shows the strength of that direction.

ADVANCE / DECLINE THEORY: A stock market theory that uses the relative number of advances versus declines in relation to total issues traded on the New York Stock Exchange (NYSE) to make buying and/or selling decision. This theory measures the breadth of the market.

ADVANCED REFUNDING: A procedure where outstanding securities are refinanced by a new issue of securities prior to the date on which the outstanding securities become due, or are callable. Accordingly, for a period of time, both the issue being refunded and the refunding issue are outstanding. The proceeds of the refunding securities are generally invested in U.S. Government or federal agency securities (although other instruments such as bank certificates of deposit are occasionally used), with principal and interest from these securities being used to pay principal and interest on the refunded securities (or, in some cases, interest on the refunding securities and subsequently principal on the refunded securities). Securities are ” escrowed to maturity” when the proceeds of the refunding securities are deposited in escrow for investment in an amount sufficient to pay the principal of and interest on the issue being refunded on the original interest payment and maturity dates. Securities are considered “pre-refunded” when the refunding issue’s proceeds are escrowed only until a call date or dates on the refunded issue, with the refunded issue redeemed at that time.

ADVERSE OPINION: Accounting opinion that a firm’s financial statements do not accurately reflect its current financial position or operating conditions.

ADVISOR: A registered individual (registered representative or stockbroker) or organization that is employed by a healthcare entity, other business, or private individual to give professional advice on its investments and management of its assets and/or endowment funds.

ADVISORY LETTER: A written offer of financial, economic or accounting advice.

AFFIDAVIT: Written statement made under oath before an authorized person such as an attorney or notary public.

AFFILIATED PERSON: Anyone in a position to influence decisions made in a healthcare or other corporation, including officers, directors, principal stockholders, and members of their immediate families. Their shares are often referred to as “Control Stock”.

AFFILIATION: The legally separate status of a firm within another organization.

AFTER HOURS: Securities trading after regular hours on a stock exchange.

AFTER MARKET: A market for a security either over-the-counter (OTC) or on an exchange after an initial public offering has been made.

AFTER-TAX BASIS: Ratio of pre to post tax returns (A 10% taxable asset would have an after-tax return of 6.5% for one in a 35% tax bracket).

AGAINST-THE-BOX: A short securities sales by the owner of a long (owned) securities position.

AGE OF ACCOUNTS: Accounts Receivable (AR) or Accounts Payable (AP) accounting recognition time lapse

AGE-OF-PLANT RATIO: The average number of years a healthcare entity has owned its own plant and/or equipment (accumulated depreciation / depreciated expense).

AGENCIES: A colloquial term for securities issued by one of the federal agencies

AGENT: The role of a broker / dealer firm when it acts as an intermediary or broker, between its customer and a market maker or contra-broker. For this service the firm receives a stated commission or fee. An insurance agent or securities salesperson (stockbroker).

agent’s commission: The payment of a percentage of the premium generated from a securities sale or insurance policy to the agent/broker by a company.

AGGREGATE: Broad totals of healthcare or other economic variables such as medical production units, staffing, facility over or under-capacity or nurse unemployment.

AGREGATE DEMAND: The ratio between the quantity of a healthcare good or service demanded, and its price level.

AGGREGATE HEALTHCARE DEMAND CURVE: An illustrative model of total domestic healthcare production demanded, measured by real GDP, which varies with price level.

AGGREGATE HEALTHCARE DEBT: The purchasing power of money outstanding that households have borrowed for healthcare products and services, and are obligated to repay.

AGGREGATE HEALTHCARE EXPENDITURE: The sum of healthcare consumption expenditures, investment expenditures, purchases and net exports during a fiscal year.

AGGREGATE HEALTHCARE PURCHASES: The market value of healthcare goods, products and services purchased at any level of income.

AGGREGATE HEALTHCARE QUANTITY DEMANDED: The quantity of final healthcare goods, products and services that buyers are willing and able to purchase at a given price.

AGGREGATE HEALTHCARE QUANTITY SUPPLIED: The quantity of final healthcare goods, products and services supplied by doctors, hospitals, clinics, facilities, medical care producers and vendors at a given price.

AGGREGATE REAL INCOME: The real or nominal money income of a nation, healthcare facility, insurance company or cohort, adjusted for inflation.

AGGREGATE SUPPLY: The relationship between healthcare price levels and the total quantity of healthcare goods, products and services supplied.

AGGREGATE SUPPLY CURVE: An illustration of how the aggregate quantity of goods, products and services supplied changes with various price levels, all things being equal.

AGGRESSIVE FINANCIAL STRATEGY: Attempt to maximize profit by investing in riskier products to obtain higher financial returns.

AGREEMENT AMONG UNDERWRITERS: An agreement among members of an underwriting syndicate (investment bankers) specifying the syndicate manager, the duties, and his privileges, among other things.

AGREEMENT OF LIMITED PARTNERSHIP: Contractual agreement between the limited partners and the general partner(s).

AGING SCHEDULE: A classification of Accounts Receivable (ARs) based on age.

AIR POCKET: A security that drops fast in the face of bad internal (non-systemic) corporate news.

ALIEN CORPOARATION: Company incorporated in a foreign country regardless of where it operates.

ALL-OR-NONE OFFERING: A “best-efforts” offering of newly issued securities in which the corporation instructs the investment banker to cancel the entire offering (sold and unsold) if all of it cannot be distributed.

ALL-OR-NONE (AON) ORDER: An order to buy or sell more than one round lot of securities at one time, and at a designated price or better. It must not be executed until both of these conditions can be satisfied simultaneously.

ALLIED MEMBER: General or voting member of the NYSE who is not a personal member.

ALLIGATOR SPREAD: High commission costs in the options market.

ALLOCATIVE EFFICIENCY: The condition that exists when healthcare resources are divided in ways that allow maximum net benefit for their use.

ALLOCATON BASE: The determination of corporate costs based on causal relationships.

ALLOTMENT: Portion of securities assigned to each underwriting syndicate (investment banker).

ALLOWABLE COST: Retrospective healthcare payment system that determines reimbursement rates after all non-medically necessary expenses and costs.

ALLOWANCE: Deduction from the total value of a healthcare invoice or bill, as noted on an Explanation of Benefits (EOB) statement.

ALLOWANCE FOR UNCOLLECTABLE ACCOUNTS: Balance sheet entry that lists the total number of accounts that will not likely be collected; also known as bad debt expenses (BDEs).

ALLOWABLE CHARGE: The maximum fee that a third party will reimburse a medical provider or healthcare entity for a given healthcare product or service.

ALLOWABLE COSTS: Items or elements of a healthcare institution’s costs reimbursable under a payment formula. Allowable costs may exclude, for example, uncovered services, luxury accommodations, costs that are not reasonable and expenditures that are unnecessary.

ALLOWANCE METHOD: The recording of losses on the basis of estimates, rather than final outcome.

ALLOWANCE FOR UNCOLLECTIBLES: Balance sheet account that estimates a medical provider or healthcare organization’s total amount of patient or vendor Accounts Receivable (ARs) that will likely not be collected.

Allowed Amount: Maximum dollar amount assigned for a medical service or procedure based on various pricing mechanisms; also know as a maximum allowable fee.

Allowed-Charge: The re-imbursement Medicare approves for physician payment. Typically, Medicare pays 80 percent of the approved charge and the beneficiary pays the remaining 20 percent. The allowed charge for a nonparticipating physician is 95 percent of that for a participating physician. Nonparticipating physicians may bill beneficiaries for an additional amount above the allowed charge.

Allowed-Expense: The maximum dollar amount for covered health care expenses that a third party will reimburse for a service or item when a claim is made.

Alpha: The measure of the amount of a stock’s expected return that is not related to the stock’s sensitivity to market volatility. It measures the residual non-market influences that contribute to a securities risk unique to each security. Alpha uses beta as a measure of risk, a benchmark and a risk free rate of return (usually T-bills) to compare actual performance with expected performance. For example, a fund with a beta of .80 in a market that rises 10% is expected to rise 8%. If the risk-free return is 3%, the alpha would be –.6%, calculated as follows:

(Fund return – Risk-free return) – (Beta x Excess return)  = Alpha

(8% – 3%) – [.8 × (10% – 3%)]           =  – .6%

A positive alpha indicates out performance while a negative alpha means underperformance.

ALPHABET STOCK: Common stock categories associated with certain subsidiaries created by restructurings or corporate acquisitions.

ALERNATIVE COST: An older term for economic opportunity cost.

Alternative minimum tax (AMT):  An additional tax (26-28%) for taxpayers who benefit from the tax laws which allow special treatment to some kinds of income and special deductions to some kinds of expenses.

ALTERNATIVE ORDER: Securities order given to a stock broker between two courses of action, either or, but never both.

AMBAC (AMBAC INDEMNITY CORPORATION): A wholly owned subsidiary of the Mortgage Guarantee Investment Corporation (MGIC) which offers non-cancelable insurance contracts by which it agrees to pay a security holder all, or any part, of scheduled principal and interest payments on the securities as they become due and payable, in the event that the issuer is unable to pay. Hospital bonds insured by AMBAC are currently granted a Standard & Poor’s rating of AAA.

AMBULATORY PATIENT GROUP/CLASS: (APG/C): Similar or like class of patients receiving ambulatory healthcare services, goods or products that are homogenous in nature, diagnosis, treatments or other demographic benchmarks.

AMBULATORY PAYMEN GROUP/CLASS: (APG/C): Payment system for ambulatory healthcare services, goods or products for a homogenous diagnostic/treatment or condition. Fee schedule similar to the Diagnostic Related Groups (DRGs) used in a hospital setting

American accounting association (AAA):

AMERICAN ASSOCIATION OF INDIVIDUAL INVESTorS (AAII): Chicago based non-profit organization designed to educate all investors about securities and financial investments.

AMERICAN DEPOSITORY RECEIPT (ADR): A receipt evidencing shares of a foreign corporation held on deposit or under the control of a U. S. banking institution; it is used to facilitate transactions and expedite transfer of beneficial ownership for a foreign security in the U.S. Everything is done in dollars and the ADR holder doesn’t have voting rights; essentially the same as an American Depository Share (ADS).

AMERICAN DEPOSITORY SHARE: Similar to an ADR, but is an instrument that is traded, while an ADR certificate represents a number of ADSs.



AMERICAN STOCK EXCHANGE PRICE CHANGE INDEX: An un-weighted market index for all common stocks listed on the AMEX, prepared hourly.

AMERICAN-STYLE EXERCISE: Option can be exercised at any point prior to expiration.

American-style option: An option that can be exercised at any time prior to expiration.

AMORTIZE: To pay-off or liquidate a debt on an installment basis.

Amortization: The allocation of the cost of an intangible asset, like a CT scanner, over a statutory period. Regular payments that are made over a period of time to repay principal and interest on a loan.

AMORTIZATION OF DEBT (LOAN): The process of paying the principal amount of a hospital or other debt security by periodic payments either directly to security holders or to a sinking fund for the benefit of security holders.

AMORTIZATION OF PREMIUM: An accounting process by which the book value of a security purchased at a premium above par is decreased during the security’s holding period. The amortization reflects the decrease in the security’s holding value as it approaches the redemption date. Under a “straight line” amortization method, the amount of the yearly amortization is the same for all years, and is equal to the product of the total amount of the premium divided by the number of years to redemption.

AMOUNT BILLED: Value of healthcare services or goods rendered by a facility or provider, on a bill or insurance claim.

AMT BOND: Certain private purpose municipal hospital bonds pay tax-exempt interest that is subject to the alternative minimum tax. They are called private purpose rather than public purpose because 10% or more of the proceeds goes to private activities. Examples are bonds used to fund large ASCs, public or private hospitals. The Municipal Securities Rulemaking Board (MSRB) rules require that confirmations indicate if the bond is subject to the AMT.

ANALYST: One who studies public companies and makes sell or buy recommendations to individuals or corporations.

AND INTEREST“: A hospital bond transaction in which the buyer pays the seller a contract price plus interest accrued since the issuer’s last interest payment. Virtually all interest bearing bonds always trade “and interest“.

ANGEL: A wealthy private investor.

ANKLE BITER: A high-risk and smaller capitalized company.

ANNUAL BASIS: Statistical method annualized financial figures of less than twelve months coverage.

Annual fees: Pre-determine pricing in concierge medicine based on the desired number of patients in a practice. The number of patients in such a model can range from 100 individuals to upwards of 1,000 patients.

ANNUAL PERCENT RATE (APR): Annual cost to borrow money funds; with full disclosure under the Truth-in-Lending Act (TLA-Regulation Z).

ANNUAL REPORT: Yearly report sent to a public firm’s shareholders.

ANNUALIZE: To convert to an annual basis.

ANNUITANT: A person who receives a distribution from an annuity contract.

ANNUITIZE: The progression of an annuity contract from the accumulation or lump sum stage, to the payout distribution sage. To distribute funds in a periodic fashion over time.

ANNUAL PERCENT RATE (APR): Simple annual percentage for the cost of credit.

ANNUAL PREMIUM: The premium amount required on an annual basis under the contractual requirements of a policy to keep a health insurance or other subscription policy in force.

ANNUAL REPORT: A formal statement issued yearly by a corporation to its shareowners. It shows assets, liabilities, equity revenues, expenses, etc. It is a reflection of the corporation’s condition at the close of the business year (balance sheet) and earnings performance (income statement).

ANNUIANT: One who receives annuity benefits.

ANNUITY: A series of equal periodic payments. An investment product in which an investor contributes money into a plan and then elects to receive pay-out in a fixed or variable amount, usually at retirement. Two important features of this product: (1) Tax deferred growth of earnings during the accumulation period. However, it is important to note that when you elect to receive payment you will be taxed at ordinary income rates on everything exceeding the cost basis. (2) The annuity will provide lifetime retirement income for the annuitant through the mortality guarantee.

ANNUITY CERTAIN: Annuity that pays a predetermined monthly benefit for a specific time period.

ANUITY DUE: A series of equal periodic payments made at the beginning of the period.

ANNUITY FACTOR: A multiplication factor for the first annuity cash flow amount that represent the Present Value (PV) of the remaining annuity corpus.

ANNUITY UNIT: Unit used to value the separate account of an annuity during the pay-out (annuity) phase. The number of annuity units is a fixed amount designated when electing to annuitize. With a variable annuity, the value of the units will vary according to the performance of the investments in the separate account, while in a fixed annuity the value remains constant.

ANTICIPATED HOLDING PERIOD: The time period an asset is expected to be owned.

ANTICIPATION NOTE: A short-term liability extinguished by specific revenues.

ANTI-DILUTIVE: Common stock conversion method that increases, rather than decreases, earnings per share.

anti-rebate laws: State laws that prohibit an insurance agent or company from giving part of the premium back to the insured as an inducement to buy health or other insurance coverage.

ANTI-TRUST LAWS: Legislation such as the Sherman and Clayton Acts to promote competition and control monopoly.

ANTITRUST STATUTUES: Laws that attempt to prevent unfair healthcare business practices that may give rise to monopoly power.

APPARENT AUTHORITY: An agent’s power to bind an organization to third-party contracts.

Application Fee: Fees that are paid upon application.

Appraisal: The act or process of determining value, especially for a healthcare business entity, clinic or medical practice, etc. It is synonymous with valuation.

APPRAISAL COSTS: The expenses incurred to detect poor quality product or goods.

Appraisal Report: Written report by an appraiser containing an opinion as to value and the reasoning leading to that opinion.

APPRAISED VALUE: A business appraiser’s or medical practice valuator’s conclusion; Opinion of Value.

Appreciation: Asset value increase in response to inflation, and/or through increases in market supply-and-demand factors.

APPROPRIATIONS: Government sponsored fund raising for a specific purpose and time period.

APPROVED AMOUNT: Reasonable fee limits sanctioned by Medicare in a given area of covered service. Fee approved by payment by private health plans. Items likely reimbursed by the insurance company. May or may not be the same as the approved charge.

Approved-Charge: Limits of expenses paid by Medicare in a given area of covered service. Charges approved for payment by private health plans. Items likely to be reimbursed by a health insurance company.

APPROXIMATE PERCENT COST: Estimated of the annualized interest rate incurred by not taking a healthcare insurance premium or similar other product or service discount.

ARBITRAGE: The simultaneous purchase and sale of the same or equal securities, such as convertible securities, in such a way as to take advantage of price differences prevailing in separate markets. The risk is usually minimal and the profit correspondingly small.

ARBITRAGE PRICE THEORY (APT): A multi-variable systematic risks method to estimate the cost of equity capital.

ARBITRATION: A system offered under various Standards Review Organization (SRO) rules for resolving disputes, under which two parties who have a disagreement involving a securities transaction may submit the disagreement to an impartial panel for resolution. Securities dealers may be compelled to arbitrate disputes; customers cannot be compelled to arbitrate disputes involving securities law claims, although they can be forced to resolve general contractual disputes through arbitration if a valid arbitration agreement had been previously executed. Decisions of an arbitration panel are binding on the parties to the claim.

Arithmetic mean: The sum of a set of numbers (data points) divided by the number of data numbers (data points) in the set.

ARMS’ LENGTH TRANSACtioN: Economic dealings void of conflicts-of-interest, and conducted as though the parties were unrelated.

Arrears: Healthcare, insurance or other entity or membership contributions that have not been paid by the due date.

arrears and advances: In reference to health insurance, salary, ARs, APs, etc, as the total of amount due up to and including the current week or month. Advances are the total premiums paid in advance of the current week or month.

ARREARAGE: Overdue payments; cumulative preferred stock dividends that have been aggregated but not paid-out.

ARTICLES OF INCORPORATION: State documents filed by the founder’s of a corporation.

ASK PRICE: (1) The price at which a healthcare security, stocks, bonds or mutual fund’s shares can be purchased. The asking or offering price means the net asset value per share plus sales charge. (2) The offer side of a quote.

ASIAN OPTION: Option contract settled on the average value of the underlying asset during the contract period.

ASSET: Any owned item, real or intangible, of exchange or commercial value.

ASSET ALLOCATION: Apportioning of the investment portfolio among categories of assets, such as money market instruments, stocks, bonds, put and call options, possibly tangible assets like precious metals, real estate and collectibles. The portfolio manager of an asset allocation mutual fund has more latitude than that of any other.

ASSET BACKED SECURITIES: Loan vouched for by company ARs, insurance or other assets.

ASSET BASED APPROACH: Medical practice valuation method using assets net of liabilities.

ASSET CLASS: Category of assets.

ASSET FINANCING: The conversion of certain assets to working-cash in exchange for a security or ownership interest in them as collateral.

ASSET LIMIT USE: Assets limited assets to a specific purpose.

ASSET PLAY: Attractive value stock with a currently depressed price.

ASSET PURCHASE: The acquisition of tangible or intangible healthcare or other resources that are expected to produce income or appreciate, over time.

ASSET STIPPER: The sale of large assets to repay large debts.

ASSET TURNOVER: A financial ratio or proportion of net sales to revenues, divided by average asset value, during a specific sales or revenue generating period.

ASSETS UNDER MANAGEMENT (AUM): Total assets under a portfolio’s manager’s control, for which a fee is charged (usually 1%).

ASSET VALUE: Net market value on a per share basis.

Ask price: The price at which a seller is offering to sell an option or stock.

ASSET MIX: The percentage of asset classes in relation to all assets.

ASSESSED VALUATION: The appraised worth of clinic or hospital property set by a taxing authority for purposes of ad valorem taxation. It is important to note that the method of establishing assessed valuation varies from state to state, with the method generally specified by state law.

ASSETS: The resources owned by a clinic, healthcare or other organization. Everything of value that a healthcare company owns or has due: cash, investments, money due, materials, inventories which are called current assets–buildings and machinery–fixed assets; and patents and good will– intangible assets.

assets, company: Those assets that include all funds, property, goods, securities, rights or resources of any kind, less such items as are declared non-admissible by state laws. Non-admissible items consist mainly of deferred or overdue insurance premiums.

ASSETS, LIMITED: Funds available for specific functions, and not for general use.

ASSET-MIX: Percentage of assets relative to the total number of assets in a portfolio, or for a healthcare or other organization.

ASIGN: To transfer ownership.

ASSIGNMENT: The non-court affiliated liquidation of a healthcare entity, business or other firm. The form imprinted on a registered securities certificate which, when completed and signed by the registered owner, authorizes the transfer of the security into the name of a new owner (designated on the form as the “assignee”). The assignment also usually provides for the granting by the registered owner of power of attorney to another person (usually the new owner or someone acting on his or her behalf) to accomplish the transfer. Assignments are often executed by the registered owner” in blank “, with the name of the assignee and the person granted power of attorney filled in subsequently.

Assignment Notification: By the Options Clearing Corporation (OCC) to the writer (seller) of an option that the holder has exercised the option and the terms of the settlement must now be met. The OCC makes assignments on a random basis.

ASSIMILATION: New stock absorption by the public after all shares are sold by the underwriting syndicate of investment banks.

ASSOCIATED PERSON: Any partner, officer, director or other employee of a stock-broker or dealer other than persons whose functions are solely clerical or administrative; in the case of a bank dealer, the term refers only to persons who are involved in the bank’s dealer activities (or have some control over them). Associated persons are most often (but not always) registered as representatives or principals.


The non-profit organization that confers the professional designation of Chartered Financial Analyst (CFA) on those who pass a three leveled examination process. Practitioners are also known as securities analysts. The new current name of the organization is the CFA Institute.

assumed-interest-rate (AIR): The rate of interest used by a health insurance company to calculate its reserves. Historically, this rate is usually rather low: 2 percent to 3 percent for sake of safety.

ASSUMPTION: The act of taking on the liabilities of another company.

AT-PAR: The price of securities at face value.

AT-RISK LIMITATIONS: The at-risk limitations (rules) affect investor basis and are important since investor cost basis establishes an upper limit on deductions. For those investments that are affected by the at-risk limitations, the investor is only allowed to include recourse debt in his basis.

AT-THE-CLOSE ORDER: An order executed at a stock market at the close of trading for the day.

AT-THE-MONEY: An option is at-the-money if the underlying security is selling for the same price as the exercise price of the option.

AT-THE-OPENING ORDER: An order to buy or sell at a limit price on the initial transaction of the day for a given security; if unsuccessful, it is automatically canceled.

ATTRIBUTION RULES: Securities tax treatment by affiliates or familial relatives as if owned by the taxpayer.

AUCTION MARKET: A market for securities, typically found on a national securities exchange, in which trading in a particular security is conducted at a specific location with all qualified persons at that post able to bid or offer securities against orders via outcry.

AUDIT: An examination of a healthcare firms financial statements and the systems, records and accounting records and controls that produced them.

AUDITOR’S REPORT: The certification and written report of an auditor’s findings.

AUDIT TRIAL: Sequential accounting record tracing source documents and financial transactions.

AUNT MILLLIE: A disparaging term for an unsophisticated investor.

AUTHORITY: A unit or agency of government established to perform specialized functions, usually financed by service charges, fees or tolls, although it may also have taxing powers. In many cases, authorities have the power to issue debt that is secured by the lease rental payments made by a governmental unit using the facilities constructed with bond proceeds. An authority may function independently of other governmental units, or it may depend upon other units for its creation, funding or administrative oversight. Examples of authorities include hospital and health facilities authorities, industrial development authorities and housing authorities.

AUTHORIZATION APPROACH: A top-down authoritarian approach to financial, healthcare or business management with little rank-and-file input.

AUTHORIZED STOCK SHARES: The maximum number of shares permitted by a State Secretary, and issued by a newly chartered hospital or healthcare corporation.

AUTOMATIC CLEARING HOUSE (ACH): Electronic check processing between banks and financial institutions, and customers, hospitals, clinical and medical practices.

Automatic Investment Plan: A service that allows investors to invest automatically, by transferring money from bank or brokerage accounts at regular intervals.

AUTOMATIC REINVESTMENT: The option available to security or mutual fund shareholders whereby fund income dividends and capital gains distributions are automatically put back into the fund to buy new shares and thereby build up holdings.

AUTOMATIC STABILIZERS: Federal expenditures or receipts that solidify the economy without Congressional intervention.

AUTOMATIC STAY: A bankruptcy court petition to prevent creditor pre-petition debt collection.

Automated Teller Machine (ATM): Machine that allows a customer to perform common teller transactions, like cash withdrawals and transfers; generally accessible 24 hours a day, 7 days a week.

AUTONOMOUS HEaLTHCARE CONSUMPTION: The portion of annual consumer healthcare purchases that is not affected, or is independent of, current disposable income.

AUTONOMOUS HEALTHCARE PURCHASES: healthcare purchases or autonomous consumption that induce a shift in aggregate purchases.

AVERAGE: The arithmetic and mathematical mean of a set of data points.

Average Charge per Day: The average charge billed by hospitals for one day of care, which is Adjusted Total Charges (ATC) divided by total days of care. Only patients discharged are included in this calculation.

Average Charge per Stay: The average charge billed by hospitals for an inpatient stay (from the day of admission to the day of discharge), which is Adjusted Total Charges (ATC) divided by number of discharges. Only patients discharged are included.

AVERAGE COLLECTION PERIOD: The numbers of days need to collect Accounts Receivable (ARs).

AVERAGE COST: Total costs divided by the number of output units, produced over time.

AVERAGE DAILY CENSUS (ADC): The number of patients serviced each day, divided by the number of service days in a given time period; mean daily patient census.

AVERAGE DOWN: Sequential securities or other goods, purchased over time as share priced or costs fall.

AVERAGE EQUITY: A brokerage trading account’s average daily balance.

AVERAGE FIXED COST: Fixed costs divided by the number of output units, produced over a given time.

AVERAGE INPUT COST: The cost or price of a healthcare input.

AVERAGE LENGTH OF STAY (ALOS): The sum of patient days, divided by the number of patients served in a given time period; mean length of patient stay.

AVERAGE MATURITY: Mean time to maturity for a portfolio basket of fixed term debt investments.

Average Payment Rate: The amount of money that HCFA (CMS) could conceivably pay an HMO for services to Medicare recipients under a risk contract.

AVERAGE PAYMENT PERIOD: Ratio that suggests how long it takes for a medical provider or healthcare organization to pay its bills.

AVERAGE PRODUCT (of labor): Total healthcare output per unit of labor.

AVERAGE PRODUCT (of input): Total healthcare product or services output produced over a given time period, divided by the number of units of that output used.

AVERAGE PROPENSITY TO CONSUME (healthcAre): The fraction of total disposable income spent on healthcare consumption, equal to personal consumption expenditures, divided by disposable income.

AVERAGE REVENUE: Total healthcare or other revenue received per unit of good, product or service sold.

Average Annual Total Return:  The average annual profit or loss realized at the end of a specified calendar period, assuming all dividends and capital gains, stated as the percentage gained or lost per dollar invested.

Average Daily Balance: Mean dollar amount in an account over a specific period of time. The formula for calculating the Average Daily Balance is accomplished by adding the daily balances over a period of time and dividing by the total number of days in that period.

Average Maturity: Bond investors can determine a mean for the maturity dates of a portfolio’s debt securities to come up with the portfolio’s average maturity. Generally, the longer the average maturity, the greater the portfolio’s sensitivity to interest-rate changes, which means more price fluctuation.

AVERAGE VARIABLE COST: Variable cost divided by the number of units of healthcare or other products, services or outputs produced over a period of time.

Average Wholesale Price (AWP): Commonly used in pharmacy contracting, the AWP is generally determined through reference to a common source of information.

AVOIDABLE COST: Variable or incremental cost; out-of-pocket expense.

AVOIDABLE FIXeD COST: A fixed cost that may no longer be needed if the medical product line, or healthcare service, is discontinued.

AWAY FROM THE MARKET: A low limit order or higher offer price than current market value of a security.


B2B: Business-to-Business.

B2C: Business-to-Consumer.

B2P: Business-to-Patient.

BACK DATING: The predating of a letter of intent to allow an investor to incorporate recent large deposits for the purpose of qualifying for a load-discount on a purchase of open-end investment company shares.

back-end load: A surrender charge deducted in some financial and insurance products. Most have a decreasing back-end load that generally disappears completely after a certain number of years.

BACK-UP: The reverse of a market trend.

BACK-UP LINE: Line of credit if new credit notes can not be secured to cover maturing older notes.

BACKWARD BENDING HEALTHCARE LABOR SUPPLY CURVE: A graphical curve suggesting that the substitution effect on a healthcare worker’s labor services outweighs the income effect only at relatively low wages.

BACKWARD INTEGRATION: Company acquisition of its suppliers and vendors.

BACKING AWAY: Failure to make good on a bid for a minimum number of securities.

BAD-DEBT EXPENSE: Amount owed to a healthcare or other business entity that will not be paid.

BAIL OUT: To sell securities fast regardless of price.

BAKED-in-THE CAKE: Some factor already reflected in a securities market price.

balance: The residual amount of money due a company from its agent after all credits and charges are calculated.

Balance- Available:- The amount of money that can be withdrawn from a savings or checking account without any limitation. The available balance does not include funds on hold or interest not yet posted.

Balance Billing: (1) Physician charges in excess of Medicare or contractually allowed amounts, for which Medicare or contractual patients are responsible, subject to a limit. (2) In Medicare and private fee-for-service health insurance, the practice of billing patients in excess of the amount approved by the health plan. In Medicare, a balance bill cannot exceed 15 percent of the allowed charge for nonparticipating physicians.

Balance -Current: A amount of money in a savings or checking account, including funds on hold but excluding un-posted interest.

BALANCED FUND: Investment companies that strive to minimize market risks while at the same time earning reasonable current income with varying percentages of bond, preferred, and common stocks.BALANCE SHEET: One of four major financial statements for a healthcare organization. It presents a summary of assets, liabilities and net assets for a specific date. A condensed statement showing the nature and amount of assets and liabilities, shown in dollar amounts what the company owns, what it owes, and the ownership interest (shareholders’ equity). 

BALANCE sheet equation: Assets = Liabilities plus Stockholder’s (owner’s) Equity. 

balance sheet reserve: Amount expressed as a liability on a company’s balance sheet for benefits owed to owners.

balance sheet reserve plan: A funding plan that sets up a bookkeeping entry acknowledging some or all of the liability incurred for the payment of benefits and taking this liability into account in determining profits and the stockholders’ equity.

BALOON INTEREST: The final large interest payment needed to retire a debt.

BALLOON MATURITY: Maturity within a serial issue of securities that contains a disproportionately large percentage of the principal as the amount of original issue; and generally distinguished from a term bond by the presence of serial maturities in the years immediately preceding the balloon maturity

BALLOON PAYMENT: The final large principle payment needed to retire a debt.

BANKERS ACCEPTANCE: Low-interest bills of exchange guaranteed (accepted) by a bank or trust company for payment within one to nine months, to provide DME or medical manufacturers and exporters with capital to operate between the time of manufacturing (or exporting) and payment by purchasers. Bids and offers in the secondary marketplace are at prices discounted from the face value.

Bank Draft: Check drawn by one bank against funds deposited into its account at another bank, authorizing the second bank to make payment to the individual named in the draft.

Bank Insurance Fund (BIF): One of the two separate FDIC deposit insurance funds generally covering insured deposits in banks and certain savings institutions.

BANK LINE: Moral, not legal, commitment of a bank to make a loan.

BANKMAIL: A bank’s agreement not to finance another firm’s takeover bid.

bankrupt: Unable to pay debts. 

bankruptcy: A legal proceeding from the Bankruptcy Reform Act (BRA) of 1978, ordering the distribution of an insolvent company or person’s property among creditors, thus relieving this individual of all liability to these creditors, even though this payment may be less than the full obligation to them:

  • Chapter 7: Business forced asset sale and liquidation.
  • Chapter 11: Business debt reorganization.
  • Chapter 13: Personal debt reorganization.

BANS: Notes issued by a governmental unit, usually for capital projects, which are paid from the proceeds of the issuance of long-term bonds.

BAR: Colloquial slang term for one million dollars.

BARBELL PORTFOLIO: Bond distribution where most maturity dates either fall at the short-term or long-term end of a given time period, with few intermediate maturity bonds.

BAREFOOT PILGRIM: Colloquial slang term for an unsophisticated investor.

Bargain sale:  A sale of property to a charity for less than the property’s fair market value. [Regs. §1.1011.2]

BAROMETER: Set of financial market place data and economic indicators designed to predict or represent larger industry trends, such as the Dow Jones Industrial Average (DJIA) or the Dow Jones Utility Average (DJUA).

BARRIER TO ENTRY: A constraint that prevents sellers from entering the marketplace, such as healthcare entity Certificate of Need (CON) legislation for Ambulatory Surgery Centers (ASCs) or private specialty hospitals.

BARRON’S CONFIDENCE INDEX: A measure of investor confidence of the direction and level of securities prices.

BARTER: The process of exchanging healthcare or other goods, products or services, for other goods products or services.

BAse: Supportive price level in technical securities analysis.

Base Capitation: A specific amount per-person each month, to cover healthcare costs usually excluding pharmacy and administrative costs as well as optional coverage, such as mental health/substance abuse services.

BASE CURRENCY: Common currency used in an international portfolio.

BASE MARKET VALUE: Mean market price of a basket or group of securities at any given time.

BASE PERIOD: A reference point for economic and financial comparison.

BASE RATE: Interest rate charged by banks to their best and most creditworthy customers.

BASE YEAR: A twelve month reference point for economic and financial comparison.

BASE YEAR COSTS: Medicare term for the amount of money a hospital actually spent to render care in a specific previous annual time period.

BASIC ACCOUNTING EQUATION: Assets equal liabilities plus stockholder’s (owner’s) equity.

Basic DRG Payment Rate: The payment rate a hospital will receive for a Medicare patient in a particular diagnosis-related group. The payment rate is calculated by adjusting the standardized amount to reflect wage rates in the hospital’s geographic area (and cost of living differences unrelated to wages) and the costliness of the Diagnostic Related Group (DRG).


BASIS: Property basis is the original cost adjusted by charges (such as deductions for depreciation) or credits (such as capitalized expenditures for improvements); it sets the base for calculating depreciation and assists in establishing the gain or loss on sale of the property. An investor’s basis establishes the gain or loss on sale of the investor’s unit(s) and sets an upper limit on his ability to take any losses generated by a property.

BASIS BOOK: A book of mathematical tables used to convert yields to equivalent doll~ prices and vice versa. The factors contained in the book are time redemption, interest rate, yield (or basis), and dollar price. The basis book is used to find the dollar price when yield is known for a given interest rate and time, or to find the yield for a given dollar price when interest rate and time are known.

BASIS POINT: One tenth, of one percent of yield. If a yield increases from 8.25% to 8.50%, the difference is referred to as a 25 basis point increase. The exchange rate where: one percentage point equals 100 basis points (bps).

BASIS PRICE: A price of a security expressed in terms of the yield to maturity to be realized by the purchaser.

BASKET: Unit of stocks used in program trading activities.

BEAR: A pessimistic stock market outlook.

BEAR HUG: Corporate takeover bid on very attractive terms for stockholders, but not necessarily management.

BEAR MARKET: A declining securities market in terms of prices.

BEAR RAID: The short sale of a large number of securities

BEAR SPREAD: The purchase of a combination of puts and calls on the same security at different strike prices in order to profit as prices fall.

BEAR TRAP: A bear market reversal confronting short sellers of securities.

BEARER BONDS: Bonds that do not have the owner’s name registered on the books of the issuing corporation and that are payable to the bearer, frequently called coupon bonds. None have been issued since 1984.

Bearish: An adjective describing the belief that a stock (or the market in general) will decline in price.

BEARISH APPROACH: The strategy an investor employs when it is thought that a securities price will decline.

before-tax earnings: A person’s gross income from salary, commissions, fees, etc., before deductions for federal, state or other income taxes.

BEGINNING IVENTORY: The quantity or amount of durable medical equipment (DME) or other inventory available at the start of an accounting period.

BEHAVIORAL ASSUMPTION: Theory that suggests motivations for understanding healthcare cause-and-effect relationships among economic variables.

BEHAVIORAL FINANCE: Field of psychological study of human financial and investment behavior challenging traditional models suggesting that investors will always behave rationally.

BEIGE BOOK: Federal Reserve Board report summarizing domestic economic conditions that is published eight times per year.

BELL: Alarm sound that signals the opening and closing of a major stock exchange.

BELLWETHER: Security seen as an indicator of market direction or general trends.

BENCHMARK: The comparison of a healthcare entity or its financial statements to a recognized standard.

BENEFICIAL OWNER: The owner of securities who receives all the benefits, even though they are registered in the “street name” of a brokerage firm or nominee name of a bank handling his account.

BENEFICIARY: One who receives assets, usually as a bequest.

BENEFIT / COST RATIO: Present value of future returns divided by the present value of an investment outlay.

BEQUEST: The assets given to a beneficiary using provision in a will.

BEST EFFORTS OFFERING: An offering of newly issued securities in which the investment banker acts merely as an agent of the corporation, promising only “best efforts” in making the issue a success, but not guaranteeing the corporation its money for an unsold portion.

BEST’S RATING: Insurance company creditworthy rating score issued by the AM Best Company.

BETA: Systemic risk measurement benchmark correlating with a change in a specific index.

The measure of a stock’s volatility relative to the market, where a beta lower than 1 means the stock is less sensitive than the market as a whole; higher than 1 indicates the stock is more volatile than the market. The healthcare industry is considered to be increasingly volatile and hence possess a higher beta.

BID AND ASK (QUOTATION OR QUOTE): The bid is the highest price anyone has declared that he wants to pay for a security at a given time; the asked is the lowest price anyone will accept at the same time.

BID ASK SPREAD: Difference between the bid and ask price of securities.

Bid price: The price at which a buyer is willing to buy an option or stock.

BID WANTED: Announcement that an owner is desirous of selling securities.

BIDDER: One ready to buy securities at a specific price.

BIDDING UP: The sequential movement upward of securities price bids to disallow unexecuted orders

BIG BOARD: Slang term for the New York Stock Exchange (NYSE).

BIG FOUR: Top four US accounting firms as measured by business revenues.

BIG UGLIES: Slang term for out of favor securities.

BILATERAL MONOPOLY: A situation where only one buyer and one seller trade healthcare or other products, goods or services in a marketplace.

BILL: Slang term for “bill-of-exchange” involving a third party, or “bill-of-sale” document directly from a buyer to seller.

BILL FORM: A document generally included with the notice of sale, to be completed by underwriters interested in submitting a bid on a new issue of municipal securities to be sold at a competitive sale. A bidding underwriter will state on the bid form its proposed interest rate(s) on the issue and the price it would be willing to pay for the new issue (subject to any conditions stated by the issuer in the notice of sale), and may be asked to propose a structure for the issue.

BILL OR REDEMPTION PRICE: The price at which a mutual fund’s shares are redeemed (bought back) by the fund. The bid or redemption price usually means the net asset value per share.

Billed Claims: The fees or billed charges for healthcare services provided that have been submitted by a healthcare provider to a payer
Billing Code of 1992 (UB-92): A Federal code billing form that requires hospitals follow a specific billing procedures. It is similar to (CMS) HCFA 1500, but reserved for the inpatient component of health services.

BILLING CYCLE: The exact date for which certain medical services are billed.

BILLING FLOAT: Time delayed between medical services provision, and invoicing the third party or patient.

BINDER: Good faith money used as evidence until a transaction is finalized.

BLACK MARKET: A marketplace where healthcare or other purchasers buy from healthcare or other sellers for above market rates.

BLACK-SCHOLES MODEL: A sophisticated options pricing method.

BLENDED FUND: A mutual funds holding stocks, bonds and cash with other financial products, negotiable instruments and/or derivatives

BLIND POOL: An investment fund in which the investors are unaware of the specific properties that will be purchased by the partnership at the time they make their partnership contributions.

BLIND TRUST: A portfolio where a third party is given fiduciary discretion on behalf of its beneficiaries.

BLITZKREIG TENDOR OFFER: Slang term for an attractively priced tender offer.

BLOCK: A very large quantity of securities.

BLOCKAGE DISCOUNT: Discount for a public security due to trading size and market incongruities.

BLOWOUT: A fast sale of all shares of a new securities offering.

BLUE CHIP: The common stock of a large, well-known corporation with a relatively stable record of earnings and dividend payments over a period of many years.

BLUE LIST, THE: The daily publication (The Blue List of Current Municipal Offerings) listing municipal bonds and notes being offered by dealers in the inter-dealer market. The par value, issuer, interest rate, maturity date, price or yield, and offering dealer are indicated for each security offered. Many municipal offerings are for healthcare related entities.

BLUE LIST TOTAL: The total of the par values of all municipal securities (except zero coupon bonds) offered for sale in The Blue List. The Blue List Total, as a measure of the supply of municipal securities available for purchase, is considered to be an indicator of the status of the secondary market for municipal securities. Many municipal offerings on the Blue List are for healthcare related business entities.

BLUE-SKY: To register securities in a specific state.

BLUE-SKYING THE ISSUE: The efforts of the underwriters’ lawyers to analyze and investigate State laws regulating the distribution of securities and to register particular issues under these laws.

BLUE SKY LAW: Protection of investors against securities fraud.

BOARD OF GOVERNORS: The governing body of the National Association of Securities Dealers (NASD) comprised of persons elected by the general membership.

BOGEY: Achieving some securities exchange buy or sell target objective.

BOILER ROOM: High pressure and fast telephone solicitors attempting to sell speculative or fraudulent securities.

BOLSA: The Spanish term for a stock exchange.

BOND: A certificate representing creditor ship in an issuer and issued to raise long-term funds. The issuer pays interest, usually semi-annually, plus principal when due. A long-term corporate financial liability, as for a municipal hospital.

BOND ANTICIPATION NOTE (BAN): Municipal short-term debt instrument paid off with the proceeds of an impending bond issue.

BOND BUYER, THE: A trade paper of the municipal securities industry published each business day, which contains advertisements for offerings of new issues of municipal securities, notices of bond redemptions, statistical analyses of market activity, results of previous bond sales, and articles relating to financial markets and public finance. A second publication, Credit Markets, provides similar information on a weekly basis. Also contains new issue worksheets for computing bids.

BOND BUYER INDEXES: Indicators published on a periodic basis by The Bond Buyer showing the price levels for various groups of municipal securities. Three of the indexes represent weekly averages, based upon estimates from municipal securities underwriters, of the yields which would be offered to investors if an issuer were to bring certain types of securities to market at par on a given day. These indexes are named after the number of issuers in each index (the same issuers are used each week).

BOND COUNSEL: An attorney retained by the issuer to give a legal opinion that the issuer is authorized to issue proposed securities, the issuer has met all legal requirements necessary for issuance, and interest on the proposed securities will be exempt from federal income taxation and, where applicable, from state and local taxation. Typically, bond counsel may prepare, or review and advise the issuer regarding authorizing resolutions or ordinances, trust indentures, official statements, validation proceedings and litigation.

BOND CROWD: Sock exchange members who execute bond trades on its floor.

BOND EQUIVALENT YIELD: The return on a discounted security figured on a basis that permits comparison with interest-bearing securities. On a short-term (under six months) discounted security, the bond equivalent yield is an annualized rate of return: on a longer-term discounted security, the bond equivalent yield is determined by a computation that adjusts for the absence of periodic payments over the life of the security.

BOND FOURTH INDEX: The Bond Buyer Municipal Bond Index represents an average of the prices, adjusted to an 8.00 yield of 40 recently issued securities, based on quotations obtained from five municipal securities broker’s brokers. The 40 component issues are selected according to defined criteria and are replaced by newer issues on a periodic basis. This index is published daily and serves as the basis of a commodities futures contract.

BOND FUND: A mutual fund consisting of bonds whose objective is to provide income and minimize capital risk.

BOND INDENTURE: Terms, conditions, restrictions and covenants of a loan, bond or debt.

BOND RATING: The risk and likelihood of loan default.

BOnD RATING AGENCY: Firms that assess the credit worthiness of companies, healthcare providers, clinics, hospitals insurers, and facilities or managed care plans (Duff and Phelps, Fitch, Moody’s and Standard & Poor’s).

BOND SWAP: The simultaneous sales and purchase of like amount-bonds.

BOND YEAR: $1,000 of debt outstanding for one year .The number of “bond years” in an issue is equal to the product of the number of bonds (I bond equals $1,000 regardless of actual certificate denomination) and the number of years from the dated date (or other stated date) to the stated maturity. The total number of bond years is used in calculating the average life of an issue and its net interest cost. Computations are often made of bond years for each-maturity, or for each coupon rate, as well as total bond years for an entire issue.

BOND YIELD: The annual rate of investment return on a bond.

2 BOND INDEX: An estimation of the yield which would be offered on 20-year general obligation bonds with a composite rating of approximately “Aa” or “AA” The II issuers which comprise this index are also included in the 20 Bond Index.

20 BOND INDEX: An estimation of the yield which would be offered on 20-year general obligation bonds with a composite rating of approximately “A”.

25 BOND INDEX: An estimation of the yield that would be offered on 30-year revenue bonds. The 25 issuers used for this index cover a broad range of types of issues (transportation, housing, hospitals, water and sewer, pollution control, etc.) and vary in ratings from Moody’ s Baa to Aaa and Standard and Poor’s A to AAA, for a composite rating of Moody’s AI or Standard and Poor’s A+.

Bonus Payment: An additional amount paid by Medicare for services provided by physicians in health professional shortage areas. Payment varies with Medicare’s share of allowed charges.

BOOK-ENTRY: A system for the transfer of ownership of securities through entries on the records of a centralized agency. The centralized agency holds securities on behalf of their owners; when the securities are sold, ownership is transferred by bookkeeping entry from the seller to the purchaser. In the case of U.S. Government securities, securities certificates are not issued, and ownership of the securities is evidence in computer records maintained by the Federal Reserve System. For other types of securities, book-entry clearance is made available through linked or interfaced systems maintained by four securities depositories, which hold securities and act on behalf of their participants.

BOOK-VALUE: Cost of capital assets minus accumulated depreciation for a healthcare, or other organization. The net asset value of a healthcare companies common stock. This is calculated by dividing the net tangible assets of the company (minus the par value of any preferred stock the company has) by the number of common shares outstanding.

BOOK VALUE OF ASSET (BVA): Acquisition cost minus accumulated depreciation.

BOOK VALUE PER SHARE (BVPS): Common stock equity divided by the number of shares outstanding.

boot: Cash, property or other assets added to a financial transaction in order to equalize value.

BOOT STRAP: To start a corporation from scratch.

BOT: Slang term for bought.

BOTTOM: A support level for securities.

BOTTOM FISHER: One who purchases low priced securities before they increase in value.

BOUNCE: Non-payable check returned by the bank; or a sharp upward movement in the price of a security.

BOUTIQUE: A small specialized brokerage firm; or a medical practice that provides concierge healthcare services.

BRADY BONDS: US denominated public bonds of Latin America or other developing countries.

BRAND NAME: The distinctive modifier of a healthcare entity, doctor, hospital, clinic or procedure; non-generic, or trade-name.

BREADTH: The percentage of securities participating in a particular movement or direction.

BREAK: Volume pricing purchasing discounts.

BREAK-EVEN ANALYSIS: Approach to analyze healthcare revenue, costs and volume.

It is based on production or medical service costs between those which are variable (change when output changes), and those that are fixed (not directly related to volume).

Break-Even Point: The HMO membership level at which total revenues and total costs are equal and therefore produces neither a net gain nor loss from operations. Or, the point at which investment gains equal losses.

BREAK-OUT: Sharp rise or fall in securities price relative to some pre-existing resistance level.

BREAK-POINT: The dollar level of investment necessary to qualify a purchaser for a discounted sales charge on a quantity purchase of open-end management company shares.

BREAK-POINT SALES: The soliciting of mutual fund orders in dollar amounts just below the breakpoint level; this practice is considered contrary to equitable principles of trade.

BRICKS AND MORTAR: A tangible and physical business such as a hospital, clinic or medical practice.

BRIDGE LOAN: A short-term or swing loan.

BROAD TAPE: Projected Dow Jones or other ticker tape onto a large viewing screen.

BROKER: A registered representative (stock-broker), agent or intermediary who sells and buys securities for an investor or investor corporation.

BROKER/DEALER (BD): A general term for a securities firm which is engaged in both buying and selling securities on behalf of customers and also buying and selling on behalf of its own account.

BROKER’S BROKER (MUNICIPAL SECURITIES BROKER’S BROKER): A stock broker who deals exclusively with other municipal security brokers and dealers, and not with public investors. The services of a broker’s broker are available, generally at a standard fee established by each broker’s broker, only to certain municipal securities professionals that are selected by the broker’s broker. Broker’s brokers do not take inventory positions in municipal or hospital municipal issues.

BROUGHT-OVER-THE-WALL: To migrate from the research department, to the underwriting department, of an investment bank (Chinese wall).

BUBBLE: Highly inflated securities priced well beyond intrinsic value.

BUCK: A slang term for one US dollar.

BUCKET SHOP: Illegal brokerage firm that is slow to execute client order to augment profits.

BUCKETING: Illegal stock-broker practice of executing a client’s order for his or her own account hoping for a later profit.

BUDGET: Document of the financial planning control cycle, using the cash conversion cycle for a healthcare organization.

BUDGET CONSTRAINT: The suggestion that healthcare product or services income must equal healthcare expenditures.

BUDGET DEFICIT: The amount by which healthcare expenditures exceed healthcare revenues.

Budget Neutral: For the Medicare program, adjustment of payment rates when policies change so that total spending under the new rules is expected to be the same as it would have been under the previous payment rules.

BUDGET SURPLUS: The amount by which healthcare revenues exceed healthcare expenditures.

BUDGET VARIANCES: Differences between budgets plans, and that which was achieved.

BULGE: A fast but temporary price rise in the value of securities.

BULL: A belief that the market is rising.

BULL MARKET: A rising securities market in terms of price.

BULL SPREAD: Put or call option strategy that pays off when the underlying stock price increases.

BULLET BOND: Non-callable debt whose face value is paid off at maturity.

BULLET LOAN: A balloon debt paid-off in one payment at maturity.

Bullish: An adjective describing the belief that a stock (or the market in general) will rise in price

BULLISH APPROACH: The strategy an investor employs when it is thought that a security’s price will increase.

BUNCHING: Combing several odd or round lot orders on the floor of a stock exchange.

Bundled-Payment: A single comprehensive payment for a group of related medical services.

BUNDLED-BILLING: All inclusive global fee or packaged price for medical services for a specific procedure, treatment or intervention.

Bundled Service: Combines related medical specialty and ancillary services for an enrolled group or insured population by a group of associated healthcare providers.

Bundling: A single payment for a group of related medical services.

BURDEN: Overhead costs or indirect, non-assignable costs and expenses.

BURN RATE: Speed of use in venture capital financing before cash flows from business operations is achieved.

BUSINESS APPRAISER: One qualified to appraise a medical practice or business, and its goodwill, tangible and intangible assets.

BUSINESS CYCLE: Fluctuations in aggregate healthcare production as measured by the waxing and waning of real GNP, or in a specific sector such as the healthcare space.

BUSINESS ENTERPRISE FIRM: Healthcare operations or other investment entity pursing an economic and financial activity.


BUSINSS RISK: Degree of uncertainty regarding the future life, returns, management and profit of a business.

BUSINESS UNIT: An organizational or corporate matrix unit responsible for its own profit and loss (net income statement), within a larger enterprise.

BUSINES VALUAION: Art of potential sale price determination at fair market value.

BUSTED CONVERTIBLE: Valueless conversion feature of a convertible bond due to a low underling common stock price

BUST-UP TAKEOVER: Asset sales of a target company, in a leveraged-buy-out, used to pay for the debt that financed the takeover attempt.

BUY: To purchase assets or securities for money.

BUY-BACK: To buy a long (owned) contract to cover a short (non-owned) position in a commodity.

BUY-HOLD: To purchase securities for the long-term in order to profit through appreciated prices and reduced capital gains taxes.

BUY-MINUS: An order to purchase securities at a lower than current market value price.

BUY-ORDER: Order to a stock-broker to purchase securities at the current market price.

BUY-OUT: To purchase a controlling amount of company stock.

BUY-WRITE: The purchase of stocks and the writing of covered call options on them for potential profit.

BUY-STOP ORDER: A stop order to buy at the market only when someone else executes an order at or above the stop price. It is frequently used as a protective device for a short position.

BUYER OF AN OPTION: One who purchases a call or put option.

BUYER’S MARKET: An oversupply of securities, and the dearth of cash to purchase them at low prices.

BUYER’S OPTION CONTRACT: A securities contract in which the seller’s delivery of the certificate is due at the purchaser’s office on the date specified at the time of the transaction.

BUYING POWER: The amount of margin-able securities an investor may purchase in a margin securities account

BYLAWS: The legal documents outlining the relationship between shareholders and a healthcare or other corporation or business entity.


C2C: Client to Client

C-CORPORATION: The most common taxable corporate entity, with limited stockholder liability, under current IRS Code.

CALENDAR: List of securities about to be offered for sale.

CALENDAR EFFECT: Historic propensity of equities to perform better during certain days or months of the year, than others.

CALL: Option contract granting the right to buy a specific amount of underlying securities at a specific price and within a specific time frame.

CALL AWAY: A bond or debt issue redeemed prior to full maturity.

CALL DATE: The date after which a securities issuer has the redemption option at par, or at par plus a premium.

CALL FEATURE: (1) A feature of preferred stock through which it may be retired at the corporation’s option by paying a price equal to or slightly higher than either the par or market value. (2) A bond feature, by which all or part of an issue may be redeemed by the corporation before maturity and under certain specified conditions. The call price is usually a premium (never below par) that declines reaching par shortly before maturity.

CALL LOAN: A broker’s loan from a commercial bank using margin account customer’s securities as the bank’s protection. (Usually the securities are worth about one-third more than the amount of the loan.) It is sometimes referred to as a “call” loan because either party can terminate it on twenty-four hours’ notice.

CALL MONEY RATE: Percentage of interest a broker/dealer pays on a broker’s collateral loan, usually a bit lower than prune.

CALL OPTION: The right to buy a stated number of shares or other units of an underlying security at the exercise price, within a stated period of time.

CALL PENALTY: Call feature exercise premium cost.

CALL PREMIUM: The amount in excess of par paid when a security is called.

CALL PRICE: The price, as established in the bond contract, at which securities will be redeemed, if called. The call price is generally at or above par (although it may be at or above the “compound accreted value” on certain types of securities) and is stated as a percentage of the principal amount called.

CALL PRIVILEGE: Right of a corporation of or issuer of debt to pay of the loan at an agreed upon price prior to scheduled maturity.

CALL PROTECTION: The aspects of the redemption provisions of an issue of callable securities that partially protect an investor against an issuer’s call of the securities or act as a disincentive to the issuer’s exercise of its call privileges. These features include restrictions on an issuer’s right to call securities for a period of time after issuance (for example, an issue that cannot be called for ten years after its issuance is said to have “ten years call protection”), or requirements that an issuer pay a premium redemption price for securities called within a certain period of time after issuance. The term may also be used to refer to market factors that would discourage an issuer from calling the securities (for example, a security callable at par which has a current trading market value of 70 is said to have “30 points of call protection”). 

CALL RISK: The potential for a bond to be called, or redeemed prior to maturity, and without its current income.

CALL WRITER: The receipt of a premium and temporary obligation to sell an underlying security at a specific price at the call buyer’s discretion.

CALLABLE BONDS: Loans that may be redeemed prior to maturity.

Callable Preferred (STOCK / BOND): Stocks or bonds that may be redeemed by the issuing corporation before their stated maturity at a pre-stated “call price” that is higher than the original issue price.

CALLING: The act of exercising a call and redeeming securities prior to maturity.

CANNIBALIZATION: Purging or decreasing revenue or cash flows from an existing service or product because of a new one.

CAP (Competitive Allowance Program): The reimbursement agreement between a health insurance company and providers of health care services for traditional benefit programs. Providers are paid predetermined maximum allowances for covered health care services and agree to file claims on behalf of members.

Cap: A limit placed on the number of dollars that a health plan will pay in a specified period of time.

CAPACITY: The number of healthcare goods, products or services that can be delivered during a specific time period.

CAPITAL: The source of funds to finance non-current assets of a healthcare organization (instruments, machines, material, etc). The total-worth of an individual, partnership and/or all the shares of company stock. The assets, intellectual skills and principal as contrasted with income (which may or may not result from ownership and/or use of those assets or that principal).

CAPITAL APPRECIATION: The increase in value of an investment over time.

capital asset: An item not ordinarily bought and sold in the course of business, but having monetary value and often the source of income or used in the production thereof.

Capital asset: All assets except property held for resale in the normal course of business (inventory), trade accounts and notes receivable, and depreciable property and real estate used in a trade, healthcare or other business.

Capital asset pricing model (CAPM):  An economic model that uses beta and market return to help investors evaluate risk return trade-offs in investment decisions.

CAPITAL BUDGET: A method used to forecast and justify capital expenses.

CAPITAL CASH FLOW: The disbursements and receipts between a healthcare or other organizations and its capital suppliers, and sources of funding (bankers, investors, venture capitalists, etc).

capital charges: The funds necessary to cover interest upon and amortization of monies invested in an enterprise. The cost of borrowed money.

CAPITAL CLAIM: A capital (money supplier) vendor’s claim on a healthcare or other organization, as evidenced by securities, equity or partnerships, etc.

Capital Costs: Depreciation, interest, leases and rentals, and taxes and insurance on tangible medical or healthcare assets like physical plant and equipment.

capital expenditures: Outlays of cash or other property or the creation of liability in exchange for property to remain permanently in the business; usually land, buildings, machinery and equipment.

CAPITAL FINANCING: Financing of non-current assets.

CAPITAL FORMATION: The investment in healthcare plant, facilities and equipment.

CAPITAL GAIN (OR LOSS): Profit (or loss), or increase/decrease in value, from the sale of a capital asset. Capital gains may be short term (12 months or less) or long term (more than 12 months). Capital losses are used to offset capital gains to establish a net position for tax purposes.

CAPITAL GAINS DISTRIBUTIONS: Payments to mutual fund shareholders of gains realized on the sale of the fund’s portfolio securities. These amounts, if any, are paid once a year.

capital gains tax: A provision in the federal income tax law that previously subjected profits from the sale of capital assets to less tax than would be required for ordinary income.

CAPITAL INFUSION: To ad new sources of money (capital) or financing to a healthcare or other entity.

CAPITAL INTENSIVE: Medial specialty, healthcare or other business that requires large outlays of capital, often with low expenses or high margins.

CAPITAL LEASE: Renting an asset for its entire economic lifespan.

Capital loss carryover: Allows taxpayers to carry over unused capital losses indefinitely. Capital loss carryovers can be deducted in subsequent years, first from capital gain for that year, then from ordinary income to the extent of $3,000. Any unused loss is then carried over.

CAPITAL MARKET: The market for equity securities (stocks) and debt obligations with maturities in excess of one year. The market for long-term investments involving banks, insurance companies, pension funds and trust companies.

CAPITAL RATIONING: Limitation or constraint on the total size of a capital investment.

CAPITAL RISK: The potential for monetary loss unrelated to an issuer’s financial strength.

CAPITAL STOCK: A firms outstanding preferred and common stock, listed at par value.

CAPITAL STRUCTURE: The permanent and long term financing structure of a healthcare or other organization including long-term debt, preferred stock and net worth; but not including short term debt or reserve accountants.

CAPITAL SURPLUS: Corporate money in excess of stated stock value at the time of first sale. Paid-in capital, plus paid-in surplus.

CAPITALISM: The economic system characterized by private ownership, freedom of choice, competition and reliance on free markets.

CAPITALIZATION: The monetary total of the securities (bonds, preferred stocks, and common stocks) issued or authorized by a corporation. Total capitalization also includes retained earnings.

CAPITALIZATION OF EARNINGS: Income approach valuation method used to convert earnings for a single period into value using a capitalization factor or rate.

CAPITALIZATION FACTOR OR RATE: A divisor or multiplier to estimate financial activity of a single period into a value estimate.

capital, gross working: Current Assets.

CAPITAL LEASE: The renting of a healthcare or other asset for almost all of its economic, but not always useful, life.

Capital Market Line: Represents a spectrum of two-asset portfolios, moving from a portfolio invested in 100% of the least risky asset to a portfolio invested in 100% of the most risky one. The Capital Market Line is plotted on a graph with % return plotted on the Y-axis and risk (standard deviation) plotted on the X-axis.

Capitalization rate: The ratio of net operating income divided by the value (or purchase price) of a property. Also known as capitalization rate, or rate of return.

Capitalization ratios: Analysis of the components of a healthcare or other company’s capital structure, including debt (bonds), stock, and surplus, which show the relative importance of the sources of financing.

capital net worth: A business’s total assets, less its liabilities.

capital stock: The shares of ownership in a corporation.

CAPITAL STOCK AUTHORIZED: The stock authorized but not yet issued by a company.

CAPITAL STOCK ISSUED: The stock issued and authorized by a company’s charter.

CAPITAL STOCK OUTSTANDING: The stock issued and still outstanding by a company’s charter.

CAPITAL STRUCTURE: The relative amounts of debt, equity, cash and/or other hybrid securities in a healthcare or other organization.

CAPITAL STRUCTURE RATIOS: The relationship and structure of a healthcare or other organization’s assets, and whether the company can assume new debt.

CAPITAL TURNOVER: Services, product or sales revenues divided by average stockholder equity (net worth).

capital utilization method: A method of determining the amount of money needed to satisfy future income needs, based on the projection that both the earnings and principal will be spent at the end of the period during which the income will be needed.

capitalization: The act or process of converting (obtaining the present worth of) future incomes into current equivalent capital value. The monetary total of the securities (bonds, preferred stocks, and common stocks) issued or authorized by a hospital or healthcare corporation. Total capitalization also includes retained earnings.

capitalization of interest: The process of automatically adding the unpaid interest to the principal of a policy loan.

capitalization rate: The rate of interest or return used in the process of capitalization, ordinarily assumed to reflect the factor or risk to capital so invested.

CAPITALIZED COST: To record a cost as part of an asset rather than an expense.

capitalized value: The money valuation of a business arrived at by dividing the annual profits by an assumed rate of earning that is usually the current capitalization rate for similar risks.

Capitation: (1) Method of payment for health services in which a physician or hospital is paid a fixed amount for each person served regardless of the actual number or nature of services provided. (2) A method of paying health care providers or insurers in which a fixed amount is paid per enrollee to cover a defined set of services over a specified period, regardless or actual services provided. (3) A health insurance payment mechanism that pays a fixed amount per person to cover services. Capitation may be used by purchasers to pay health plans or by plans to pay providers.

CAPITATED CONTRACT: Health insurance contract that pays a fixed fee per each patient it covers.

CAPPING: Form of market manipulation in which a broker/dealer with an established short position in calls sells large blocks of the underlying security in an attempt to force the price down and lower the loss potential on the naked calls.

CAPS (CAPPED INDEX OPTIONS): Limit the gain/loss potential from trades in index options. For example, the holder of an MBA, Inc., 330 call with a 30-point cap would only realize a 30-point maximum gain even if the index closed at 390. Likewise, the writer has a maximum loss of the cap minus premium.

CARRY BACK/FORWARD: Losses that are carried back or forward to reduce federal income taxes.

Carrying cost: The interest expense on money borrowed to finance a stock or option position.

Carryover Deductible: Allows any amount applied toward the deductible during the last quarter of the calendar year to apply also toward the next year’s deductible. For example, expenses incurred during November or December will apply toward the next year’s deductible amount.

CARTEL: A group of healthcare or other business entities (petroleum exporters) that attempt to control prices and coordinate product output and service decisions as if it were a single unit.

CASH: Coins, currency or other liquid marketable securities used to finance a health insurance, managed care or other organization’s daily operations.

CASH ACCOUNT: A customer account, required by SEC Regulation T to be paid in full for securities purchased, within one day of the standard NASD payment period.

cash assets: Assets such as cash or cash-equivalents that can be quickly converted into cash.

CASH BASIS OF ACCOuNting: Accounting system that recognizes revenues when cash received and expenses when paid.

CASH BUDGET: A projection of cash inflows and outflows for a healthcare entity, or business, over a scheduled period of time.

CASH COLLATERAL: The use of cash or cash equivalents as collateral for a debt, loan or bond.

CASH CONVESION CYCLE (ccc): Inventory Conversion Period, plus Receivables Collection Period, minus Payables Deferral Period.

CASH CYCLE: The length of time between the delivery of healthcare products and/or services, and their ultimate reimbursement.

CASH DISBURSEMENT JOURNAL: Ledger used to record cash payments by check.

CASH DISCOUNT: Cost reduction received for upfront cash payments.

cash dividEND: Stock dividends paid in cash, rather than more stock.

cash equivalents: Assets that can be readily converted into cash.

CASH FLOW: Reported net income of a corporation plus amounts charged off for depreciation, depletion, amortization, and extraordinary charges to reserve accounts for the particular year under consideration. All of these additional items are bookkeeping deductions and are not paid out in actual dollars and cents. The cash flow may be from operations, financing or investing activities.

CASH FLOW EQUIVALENT: Barter, or the exchange of non-cash or non-near-money assets for products or services rendered (i.e., vendor financing).

CASH FLOW FINANCING: Cash-out and inflows from business or healthcare entity financing activities, as opposed to operating activities.

CASH FLOW INVESTING: Cash-out and inflows from business or healthcare entity investing activities, as opposed to operating activities.

CASH FLOW OPERATIONS: Cash-out and inflows from business or healthcare entity operations, as opposed to financing and investing activities.

CASH FLOW STATEMENT: A non-accounting financial statement of prior or forecasted (pro-forma) cash or cash flow equivalents for a healthcare or other organization.

CASH RECEIPTS JOURNAL: Ledger used to record cash receipts.

Cash reserve: The assets that are quickly convertible into cash for the purpose of meeting unforeseen healthcare entity operating expenditures or reductions in income.

cash return: The rate of return on an investment measured by the cash returned to the investor compared to the cash invested without regard to any tax savings.

CASH INDEMNITY BENEFITS: Monetary sums paid to a patient for health insurance incurred services and/or covered claims.

Cash Out: Money back when refinancing a present mortgage. The cash a borrower receives upon refinancing all existing loans against a property with a new loan or loans that is greater than the amount needed to pay off the existing loans.

Cash settlement: The process by which the terms of an options, or other,  contract are fulfilled through the payment or receipt in dollars of the amount at which the option is in-the-money, as opposed to delivering or receiving the underlying stock.

Cashless exercise and sell program: Arrangement that allows employees to exercise stock options and sell the acquired employer stock without being required to pay cash for exercising the options.

CASHIER’S CHECK: A check drawn on a bank or similar institution’s own account.

CASHIER DEPARTMENT: A department of a broker/ dealer or other organization responsible for the physical handling of securities and money, delivery and receipt, collateral loans, borrowing, lending, and transfer of securities, and other financial transactions.

CATASTROPHE CALL: The redemption of a bond by an issuer because of a catastrophic event.

CATS and DOGS: Speculative equities with short operating histories.

Ceiling: Term referring to the limit that certain itemized deductions may not exceed. For example, charitable contributions may not exceed 50% of AGI. Also, the inflation-indexed wage base, upon which Social Security is computed for the self-employment tax, represents a ceiling.

CENSUS: The number (quantity) of patients in or serviced by, a healthcare entity at any given time period.

CENTRAL BANK: A bank of the US Federal Reserve System.

CERTAINTY: The absence of economic, business, accounting, security, financial, physical or other risk.

CERTIFICATE: The actual piece of paper that is evidence of ownership or creditor ship in a corporation. Watermarked certificates are finely engraved with delicate etchings to discourage forgery. Misplacement of a certificate by its holder will cause at least great inconvenience and at worst financial loss.

CERTIFICATE OF DEPOSIT: Negotiable securities issued by commercial banks against money deposited with them for a specified period of time. They vary in size according to amount of deposit and maturity period and may be redeemed before maturity only by sale in a secondary market. Sometimes called “Jumbo CDs, the usual minimum size may vary. They are unsecured by any specific bank asset.

CERTIFICATE OF INCORPORATION (CHARTER): A state validated certificate recognizing a business organized as a legal corporate entity.

CERTIFICATE OF LIMITED PARTNERSHIP: The legal document used to form the limited partnership, usually filed with the appropriate state government. Two or more persons must sign the certificate, although as a practical matter, the limited partners often execute a power of attorney authorizing the general partner to act on their behalf in filing the certificate.

CERTIFICATE OF INCORPORATION: The legal documents creating a corporation

CERTIFICATE OF NEED (CON): The formal justification of capital expenditures from a governmental healthcare agency; especially for a new specialty hospital, outpatient center, medical clinic, etc.

Certificate of Title: Statement provided by an abstract company, title company, or attorney stating that the title of an asset is legally held by the current owner.

cErtified check: A check guaranteed by the banks upon which it is drawn.

CERTIFIED management ACCOUNTANT (CMA): A licensed accountant who possess specific managerial knowledge and usually works for a single company.

certified public accoUntant (CPA): A licensed accountant who serves the general public rather than a company.

CERTIFIED MEDICAL PLANNER©: Professional designation (Certified Medical Planner©), first charted in 2000 that integrates the personal financial planning process for physicians with specific knowledge of contemporaneous managed care business principles, financial accounting, medical cost accounting, investing, fringe benefits, insurance and risk management, retirement, succession and estate planning, with medical practice business concepts, as accredited by the Institute of Medical Business Advisors, Inc, Atlanta, Georgia (www.MedicalBusinessAdvisors.com).

CETERIS PARIBUS: latin phrase for: “al things being equal”, which acknowledges non-controllable possibilities in a controlled testing hypothesis situation.

CHANGE IN AGGREGATE HEALTHCARE DEMAND: Change in the amount of final healthcare goods or service products to be purchased induced by something other than a change in price levels.

CHANGE IN AGGREGATE HEALTHCARE SUPPLY: Change in the amount of final healthcare goods or product services supplied and induced by something other than a change in price levels.

CHANGE IN DEMAND: Alteration of the relationship between healthcare or other prices and quantity demanded induced by a change in something other than price.

CHANGE IN INPUT DEMAND: A relationship change between price of a healthcare or other input and quantity demanded, induced by a change in one of the determinants of input demand other than price.

CHANGE IN QUANTITY DEMANDED: An alteration in the amount of healthcare or other goods and services patents and purchasers are willing and able to purchases in response to a change in prices.

CHANGE IN QUANTITY SUPPLIED: An alteration in the amount of healthcare goods and services medical professionals and healthcare entities are willing to sell in response to a change in prices.

CHANGE IN RELATIVE PRICE: An increase or decrease in the price of a healthcare good or services, relative to the average price of all other goods or services.

CHANGE IN SUPPLY: a change in the relationship of the price of a healthcare unit of output, and the quantity supplied, in response to a change in a supply determinant other than price.

CHANNEL: Directing, presenting, offering, cajoling or giving patients incentives to use particular medical providers or healthcare entities.

Charge: The posted prices, expense or cost of medical provider services, products or goods.

Charge back: The amount of money reimbursed to an HMO. Usually, the difference between the average discount price and the price bid to the pharmaceutical manufacturer.

CHARGE BASED SYSTEM: A system in which medical providers set the rates for healthcare services.

CHARGE MASTER: A comprehensive review of a physician, clinic, facility, medical provider or hospital’s charges to ensure Medicare billing compliance through complete and accurate HCPCS/CPT and UB-92 revenue code assignments for all items including supplies and pharmaceuticals.

CHARGE DOCUMENT: A bill or invoice for health services.

CHARGE OFF: Bad debt expense.

Charitable gift annuity: An arrangement under which a donor makes a gift to a charity, such as a healthcare organization, in exchange for systematic payments of income for a period of time. [Regs. §1.170A-1(d)]

Charitable income trust: A trust created by a donor that provides for income payments to a charity for a period of time, after which the remainder is paid to a non-charitable beneficiary. Payments to the charity are limited to the amount of income earned by the trust. [Rev. Rul. 79-223]

Charitable lead trust: A trust created by a donor that provides for payments to a charity for a period of time, after which the remainder is paid to a non-charitable beneficiary. Payments to the charity are either a fixed amount annually or a fixed percentage of the value of assets in the trust at the beginning of each year. Payments are not limited to the amount of income earned by the trust. [IRC §664(a)]

Charitable remainder trust: A trust created by a donor that provides for payments to a non-charitable beneficiary for a period of time, after which the remainder is paid to a charity. Payments to the non-charitable beneficiary are a fixed amount annually. Payments are not limited to the amount of income earned by the trust. [IRC §664(a)]

Charitable remainder annuity trust (CRAT):  A trust created by a donor that provides for payments to a non-charitable beneficiary for a period of time, after which the remainder is paid to a charity. Payments to the non-charitable beneficiary are a fixed amount annually. Payments are not limited to the amount of income earned by the trust. [IRC §664(d)(1)]

Charitable remainder unitrust (CRUT): A trust created by a donor that provides for payments to a non-charitable beneficiary for a period of time, after which the remainder is paid to a charity. Payments to the non-charitable beneficiary are a fixed percentage of the value of assets in the trust at either the beginning or the end of each year, depending on the trust agreement. Payments are not limited to the amount of income earned by the trust. [IRC §664(d)(2)]

CHARITY CARE: Free healthcare rendered on an indigent or pro bono basis.

CHART OF ACCOUNTS: A ledger list of al accounts and their numbers.

CHARTER: The relationship between a company and the state of incorporation.

CHARTERED FINANCIAL ANALYST (cfa): Designation awarded by the Association for Investment Management and Research (AIMR), now known as the CFA Institute, in Charlottesville, Virginia.

Chartered Financial Consultant (ChFC): A designation awarded by the American College in Bryn Mar, Pa., to insurance agents who complete financial planning courses.

Chartered Life Underwriter (CLU) A: A designation conferred by the American College. Recipients must pass examinations in business courses, including insurance, investments and taxation, and must have professional experience in life insurance planning.

CHARTIST: A type of financial analyst, known as a technician, who predicts securities patterns and trends based on past performance.

CHASTITY BONDS: Debt redeemable at par when and if a corporate takeover occurs.

CHECK: A bill-of-exchange or bank draft drawn on the writer’s account.

Check Safekeeping: Process of digitizing paid checks. A digital image becomes the official record of the transaction and is kept by the financial institution. Canceled checks are stored electronically rather than being returned to the customer.

Checking Account: An account which allows the account owner to write checks against the account on deposited funds.

CHINESE WALL: Artificial and imaginary separation between investments, research and financial departments of a brokerage house.

Churning: The practice of a provider seeing a patient more often than is medically necessary, primarily to increase revenue through an increased number of visits. A practice, in violation of SEC rules, where a salesperson affects a series of transactions in a customer’s account which are excessive in size and/or frequency in relation to the size and investment objectives of the account. An insurance agent who is churning an account is normally seeking to maximize the income (in commissions, sales credits or mark-ups) derived from the account.
Cipher: To calculate, as in mathematics; encryption.

CIRCUIT BREAKERS: Exchange methods to temporarily stop trading following pre-specified market drops.

Claim: Request for payment made to the insurance company by medical facilities, members or practitioners for health services provided to plan members. A claim may be approved (cleared for payment, rejected (not approved for payment) or pended or suspended (put aside for further investigation).

claim agent: An individual authorized by an insurance company to pay a loss.

claimant: One who submits a claim for payment of benefits for a suffered loss, according to the provisions of an insurance policy.

Claims Clearinghouse: Organizations that examine and format claims for adherence to insurer requirements before the claim is actually submitted to the health or insurance company for payment.

CLAIMS EXPENSE: Cost incurred to adjust a health or insurance claim.

CLAIMS LIMIT: Time limit on healthcare claims that usually must be made within 2 years of the service or they will not be reimbursed.

claims reserve: Within a life or health insurance company, those amounts set aside to cover future payments or claims already incurred.

CLASS OF OPTIONS: Options of the same type (call or put) covering the same underlying security.

CLASSIFIED STOCK: Equity separated into several types, such as Class A, B C, etc., and distinguished by charter, indentures, terms and conditions.

CLEAN: Free of, wholly owned or without leverage or debt.

Clear Title: Title that is free of liens or legal questions as to ownership of assets.

CLEARING CORPORATION: An organization registered as a clearing agency with the Securities and Exchange Commission which provides specialized comparison, clearance and settlement services for its members, but which does not safe keep securities on their behalf. Clearing corporations typically offer services such as envelope delivery systems, automated comparison systems, and transaction netting systems. The four registered clearing corporations are the Midwest Clearing Corporation (Chicago), the National Securities Clearing Corporation (New York), the Pacific Clearing Corporation (Los Angeles/San Francisco), and the Stock Clearing Corporation of Philadelphia.

CLEARING HOUSE FUNDS: Funds drawn on one commercial bank that are deposited in another commercial bank. It may take one of more days after the date of deposit for payments presented in this form to be credited and available to the recipient.

CLONE FUND: A mutual fund that mimics or attempts to match another, with reduced fees and expenses.

CLOSE: The last price of a security on a particular day.

CLOSE CORPORATION: A private corporation such as a medical practice, whose stock is held by a small number of stockholders or investors; privately held, non-public company.

CLOSE MARKET: A market with a narrow spread between the bid and asked price.

CLOSE-OUT PROCEDURE: The procedure taken by either party, to a financial transaction, when the contra-broker defaults. The disappointed purchaser may “buy in” and the rejected seller, may “sellout”, or liquidate

CLOSED-END MANAGEMENT COMPANY (FUND): An investment company whose equity capitalization remains constant. In other words, a fixed number of shares outstanding that are traded based on supply and demand and are not redeemable.

CLOSED-END PROVISION: A mortgage bond provision in the indenture that, in the event of default or liquidation, entitles the first bondholders to a claim upon assets senior to second and subsequent bondholders, whenever the same real assets are used as collateral for more than one issue of debt.

CLOSED A POSITION: To sell or eliminate a security from a portfolio.

Closely / privately held corporation: A medical practice, clinic or healthcare entity with shares of stock that are not required to be registered under the Securities and Exchange Act and that generally are owned by a relatively limited number of stockholders. Often, the entire stock issue is held by one family or individual, resulting in little, if any, trading of the shares. Therefore, there is no established market for the stock and such sales as occur at irregular intervals seldom reflect all of the elements of a representative transaction as defined by the term fair market value [Revenue Ruling 50-60, 1959-1, CB 237]. This type of business is also referred to as a “close corporation.”

Closing: The time and place at which all documents for debt or loan assumption or asset transfer, are signed, dated and notarized.

CLOSING ACCOUNTS: Posting and journalizing closing account entries to set the balance of revenues, expenses and equity to zero.

Closing Costs:  Fees paid by borrowers or sellers during the closing of a debt assumption or asset transfer or purchase.

CLOSING ENTRY: Drawing individual accounts into the general account.

Closing price: The final price at which a transaction was made, but not necessarily the settlement price.

CLOSING PROCESS: The process of posting and journalizing closing account entries to set the balance of revenues, expenses and equity to zero.

CLOSING PURCHASE ORDER: A transaction in which an investor wishes to buy an option having exactly the same terms as an option which he had previously sold, and terminating the obligation

CLOSING SALE: A transaction in which an investor wishes to liquidate an open position as an option holder by selling an option having the same terms as the option originally purchased.

Closing transaction: A reduction or an elimination of an open position by the appropriate offsetting purchase or sale. An existing long option position is closed out by a selling transaction. An existing short option position is closed out by a purchase transaction.

COAT TAIL: Mimicking, or following a successful investor.

COD TRANSACTION (Cash on Demand/Delivery): A purchase of securities on behalf of a customer promising full payment immediately upon delivery of the certificates to an agent bank or broker/dealer, to be settled no later than the 35th calendar day. Also known as DVP (delivery versus payment.)

CODE OF ARBITRATION: Rules established and maintained by the NASD Board of Governors to regulate arbitration of intra-member and customer/member disputes involving securities transactions.

CODE OF PROCEDURE: Rules established and maintained by the NASD Board of Governors for the administration of disciplinary proceedings stemming from infractions of the Rules of Fair Practice (RFP).

COINCIDENT: An economic benchmark that varies directly with the business cycle and may be sued as a surrogate for the economy or an individual sector.

COLD CALL: Unsolicited and/or unwanted calls or contacts enticing one into a stock, bond or other securities purchase in order to make a commission.

COLLATERAL: Assets on which a lender can claim in case of default.

COLLATERAL FLOAT: The spread or time period between fund issuance and fund availability for use by a healthcare or other entity.

COLLATERAL SECURITIES: Assets or cash against which loans are made

COLLATERAL TRUST BOND: A bond issue that is protected by a portfolio of securities held in trust by a commercial bank. The bond usually requires immediate redemption if the market value of the securities drops below or close to the value of the issue.

COLLECTIONS: A receipt for the sales of healthcare services, products, DME or goods.

COMBINATION: An option strategy combining a call and a put (either both long or both short).

COMFORT LETTER: Auditor’s statement that no material change has taken place in a prospectus or security offering registration agreement has changed since inception. Not an indicator of accuracy.

COMMAND HEALTHCARE ECONOMY: An economy where decision are made using a top-down approach for resource allocation, in state or federally sponsored healthcare programs.

COMMERCIAL BANK: A bank established primarily to accept demand deposits that can be withdrawn at any time, such as checking account deposits, and to make short-term loans to businesses.

COMMERCIAL PAPER: Unsecured, short-term (usually a maximum of 270 days) obligations in denominations from $100,000 to $1 million, issued principally by industrial or the most credit worthy corporations. It is usually traded in the securities market at a price discounted from face value.

COMMINGLING: The ill-advised mixing client owned securities with firm owned securities.

COMMISSION: A broker’s fee for handling transactions or executing orders for a client in an agency capacity.

COMMISSION BROKER: A member of the NYSE executing orders in behalf of his own organization and its customers.

COMMITMENT FEE: The unused portion of a line-of-credit; or payment to a lender to guarantee a loan, bond or mortgage.

COMMITTEE ON UNIFORM SECURITY INTIFICATION PROCEDURES (CUSIP): An agency of the NASD responsible for issuing identification numbers for virtually all publicly owned stock and bond issues.

COMMODITIES: Tangible products and goods whose future value is subject to fluctuation.

COMMON COSTS: Cost that is shared by a number of departments or healthcare services, such as rent, utilities, sales, administrations and other general expenses.

COMMON SIZE STATEMENTS: Financial statements which resent each line item as a percentage of the total, rather than in dollars.

COMMON STOCK: Owners of this kind of stock exercise greater control, and therefore benefit more from dividends and capital appreciation, than owners of preferred stock or bonds. They are paid, however, only after preferred stocks and bondholders, and their interest in the assets in the event of liquidation are junior to all others.

COMMON STOCK FUND: A mutual fund whose portfolio consists primarily of common stocks. The emphasis of such funds is usually on growth.

COMPANY DOCTOR: Corporate turnaround outside specialist from another company.

COMPARATIVE ADVANTAGE: A healthcare entity that produces goods or services at a lower opportunity cost per unit output than a related firm does.

COMPARISON: A term used to refer to an inter-dealer confirmation.

COMPENSATING BALANCE: Fund amount required in a banking institution to maintain free checking, a line of credit, or other financial services

COMPETITIVE BIDING: A method of submitting proposals for the purchase of a new issue of municipal securities by which the securities are awarded to the underwriting syndicate presenting the best bid according to stipulated criteria set forth in the notice of sale. The underwriting of securities in this manner is also referred to as a competitive or public sale.

COMPETITIVE HEALTHCARE FIRM: The sale of healthcare products, goods or services in a perfectly competitive marketplace in which there is a price taker (patients, third party insurance intermediary or corporate employer).

COMPETITIVE INPUT MARKET: A marketplace where neither individual patients or purchasers, nor individual healthcare suppliers or vendors, can influence the prices of healthcare services.

COMPLEMENTS: Healthcare products, goods or services whose use together enhances the satisfaction a patient obtains from each, individually.

COMPLIANCE: The process by which the rules and regulations of the SEC are maintained; or the National Committee on Quality Assurance (NCQA), Joint Commission on the Accreditation of Healthcare Organizations (JCAHO), or other peer-review body for a medical organization.


COMPOSITE: Average financial statement and accounts of a number of companies to signify a same industry trend; a surrogate.

COMPOSITION: an informal method of reorganization and debt reduction.

COMPOUND ANNUITY FACTOR: A multiplication factor for the first annuity cash flow amount that represents the Present Value (PV) of a remaining annuity corpus.

compound interest: Interest earned on interest. Interest earned on principal over a given period that is then added to the original principal to become the new principal upon which interest is earned during the new period, and so on, from period to period.

COMPOUNDING: Interest paid on interest previously earned.

Compounding Interest: The process of reinvesting interest to earn additional interest

Compounding Investment Earnings: Earnings on an investment’s earnings. Over time compounding can produce significant growth in the value of an investment.

CONCESSION: (1) In the sale of a new issue of municipal securities, the amount of reduction from the public offering price a syndicate grants to a dealer not a member of the syndicate, expressed as a percentage of par value (2) In the secondary market, bonds are usually offered to other dealers “less a concession, “that is, at a price expressed in terms of a net offering price (in basis or dollar price terms) minus a differential (in points or dollars per security) granted between professionals; this differential is called the” concession”.

CONDITIONAL ORDER: Unlike a market order, this securities order has specific conditions that must be met prior to a purchase or sale.

CONFIDENCE LEVEL: The statistical or emotional certainty of a financial or economic forecast.

Confirm: The written acknowledgement and details of a busines transaction.

CONFIRMATION (COMPARISON): A written summary of a transaction involving the purchase or sale of securities, which a broker or dealer provides to the contra-party. The confirmation must contain certain information describing the date, securities and the parties to the transaction.

CONGLOMERATE: A healthcare or other corporation that produces many different medical goods, products and/or services.

CONSERVATIVE STRATEGY: The avoidance of risk and the maximization of financial liquidity and cash equivalents.

Consideration: The exchange of value, for a promise, upon which an insurance contract is based. Consideration is an essential element of a binding contract. In a health insurance contract, the policy-owner’s consideration is the first premium payment and the application; the health insurance company’s consideration is the promise(s) contained in the contract.  Future premiums are not consideration but rather a condition precedent to the insurer’s obligation.

CONSENSUS FORECAST: Average collective opinion of s group of securities analysts regarding earnings-per-share estimations.

CONSIDERATION: Something of value used in exchange for an act, promise or asset.

CONSISTENCY PRINCIPLE: The theory which suggests a healthcare or other business entity should use the same accounting methods from period-to-period.

CONSOLIDATED FINANCIAL STATEMENTS: A combination of the financial statements of the parent company combined with those of its subsidiaries.

CONSOLIDATED TAX STATEMENTS: An income tax return that combines the income statements of several affiliated healthcare firms.

CONSTANT DOLLAR: Inflation adjusted base-year-dollar used to maintain purchasing power.

Constant Maturity Treasury (CMT): A calculated valued reported by the Federal Reserve Board in Statistical Release H15 to express what the yield would be on US Treasury securities for various specified fixed terms. Data is reported daily for values effective for specific dates, and as averages in effect for each week, month and year.

CONSTRAINT: Any factors that prohibits the production or sale of a healthcare or other product, good or service.

Constructive receipt: A tax doctrine that can cause deferred compensation benefits to be taxed before they are received if these benefits are made available without restriction in a year before actual payment.

CONSUMER: The individual or household, or company that purchases healthcare products and services produced by the healthcare industrial complex.

CONSUMER EQUILIBRIUM: Attained when a patient-consumer-insurer purchases healthcare services or goods over- time, until the marginal utility per dollar spent is the same for all healthcare goods and services consumed.

CONSUMER CONFIDENCE INDEX (CCI): Monthly survey that is an indicator of the propensity to shop, buy or purchase goods, or services.

CONSUMER-PRICE INDEX (CPI): A measure of the core rate of inflation, according to a diverse market basket of goods and services.

CONSUMER-PRICE MEDICAL INDEX (CPMI): A measure of the core rate of medical and healthcare services inflation, according to a diverse market basket of healthcare goods and medical services.

CONSUMER SOVEREIGNTY (HEALTHCARE): Responsiveness of the market economy to healthcare consumer, patient, and insurer demands.

CONSUMPTION: The use of medical services, goods, or services by patients.

CONSUMPTION FUNCTION (HEALTHCARE): Ratio between aggregate healthcare purchases and disposable income, for a period of time, given all other influences of consumption.

CONTAGION: The dissemination or spread of one economic crisis to another country.

CONTESTABLE MARKET: A marketplace in which seller entry and exit is not costly.

CONTINGENCY: Unexpected change in the financial environment of a healthcare entity, such as nursing labor shortages, power outage, and interest rate hikes, etc.

CONTINGENT BENEFICIARY: One who takes the place of the original beneficiary.

CONTINGENT DEFERRED LOAD: A commission due upon sale.

contingent liability: A potential liability that may become real if a particular event occurs.

CONTRA-ACCOUNT: A companion account whose normal balance is the exact opposite of the first account.

CONTRA-ASSET: The asset value increase that decreases the value of a related asset.

CONTRA-PARTY: The securities professional or customer to whom a person has sold securities or from whom a person has purchased securities.

CONTRACT SIZE: Number of units of an underlying security covered by the option contract. The usual size on equity contracts is 100 shares.

CONTRACTION: A downward trend from peak healthcare or other economic activity in the business cycle in which real GNP (or other benchmark) declines from previous values.

CONTRACTUAL ALLOWANCES: The difference between established healthcare services, goods or product prices, and those actually paid by the patient or third party because of lower contracted fee schedules or other discounts.

CONTRACTUAL (PERIODIC PAYMENT) PLAN: An investment plan for a mutual fund by which an investor agrees to invest a fixed sum of money at specified intervals over an extended period.

CONTRARIAN: Following an economic, strategic, financial or investment strategy against the consensus.

CONTRIBUTION: Revenue collections net (minus) variable costs.

CONTRIBUTION MARGIN: What is left after variable costs are removed from revenues and determined on a per-unit or total-basis.

CONTRIBUTION MARGIN INCOME STATEMENT: An income statement that groups fixed and variable expenses separately.

CONTRIBUTION MARGIN PER UNIT: The excess of sales revenue per unit over variable expenses per unit.

CONTRIBUTION MARGIN RATIO: Ratio of contribution margin to sales revenue.

CONTROL: The ability to manage or direct healthcare or other business entity policy.

CONTROL ACCOUNT: An account whose balance equals the sum of the balance in a group of related accounts in a subsidiary firm’s ledger.

CONTROL PERSON: One who owns at leas 10% of a public company or a director or officer of an affiliate of a securities issuer.

CONTROL PREMIUM: An economic percentage factor representing control of a business entity.

CONTROL SECURITY: A security owned by a control person.

CONTROLLABLE COST: A cost or expense that can be directly influenced, positively or negatively, during a specific time period.

CONTROLLER (COMPTROLLER): The chief accounting officer of a healthcare or other firm, corporation or business.

CONVERSION: (1) A bond feature by which the owner may exchange his bonds for a specified number of shares “of stock. Interest paid on such bonds is lower than the usual interest rate for straight debt issue. (2) A feature of some preferred stock by which the owner is entitled to exchange his preferred for common stock of the same company in accordance with the terms of the issue. (3) A feature of some mutual fund offering’s allowing an investor to exchange his shares for comparable value in another fund with different objectives handled by the same management group

CONVERSION COSTS: The expenses to convert direct materials into finished healthcare or other products, goods or services.

CONVERSION PARITY: The equal dollar relationship between a convertible security and the underlying stock.

CONVERSION PRICE: Used in convertible bonds to determine the number of shares to be obtained by converting. Divide $1,000 par by the conversion price.

CONVERSION RATIO: The ratio of common stock shares obtained by converting a convertible security.

CONVERSION VALUE AS STOCK: The value of bond debt in terms of the equity stock value into which it may be converted.

Convertible bonds: Although they function like other bonds, convertible bonds have an additional feature. They pay interest and have a maturity date, but they also give the investor an option to “convert” the bond into a specific number of shares of the corporation’s common stock. The so-called “equity kicker” occurs when the price of the underlying stock rises. Should it fall, the investor still receives the stated interest and receives principal upon maturity. Some variations of corporate bonds include discount bonds that trade in the secondary market. While the coupon is currently taxed at the client’s prevailing rates, the taxable event with respect to principal occurs when the bond matures. By purchasing deep-discount bonds, the investor receives the coupon rate as current income, and the difference between the investor’s purchase prices, and either the call price or the face value at maturity, though a gain, is taxed as ordinary income. The effect is to defer the investor’s taxes until the bond is called or redeemed. Some of the more actively traded corporate bonds include the following:

  • Triple A: Guaranteed Secondary Securities. Also referred to as TAGSS, these instruments give bonds with lower ratings the opportunity to be insured and resold with a top AAA rating. TAGSS are insured by Financial Security Assurance (FSA), Inc., an AAA-rated company formed to guarantee corporate asset-backed and real estate-backed securities.
  • Medium-term Notes: These highly rated corporate debt instruments, with maturities ranging from 9 months to 10 years, can be custom-tailored for an investor in both denomination and maturity. Most of these bonds are non-callable. Interest is paid semi-annually.

CONVERTIBLE PREFERED STOCK: Preferred stock that can be exchanged for common stock.

Convertible securities: Preferred stock or bonds that are exchangeable for a stated number of shares of common stock at a pre-set price (“conversion price”). The “conversion ratio” is determined by dividing the par value of the convertible security by the conversion price. The amount by which the conversion price exceeds the current market price is the “conversion premium.”

CONVERTIBES: Bonds or preferred stock with a convertible privilege attached at the time of issuance. The privilege usually gives the holder, for a certain period, the right of exchanging his security for common stock issued by the same company, on a fixed or sliding scale of exchange.

COPAYMENT: A portion or fixed percentage of money collected by a medical provider or healthcare entity for a covered patient encounter.

COOK THE BOOkS: Slang expression for false, erroneous or intentionally misleading financial statements.

COOLING OFF PERIOD: The minimum time period between the registration filing date of a security, and its effective date.

CORNERING THE MARKET: Volume purchasing of a security or commodity in order to control its price.

Corporate bonds: These debt loan bonds issued by large healthcare or other corporations, represent a promise to pay coupon rates quarterly and to repay principal upon maturity. Utilities are generally the largest issuer of corporate bonds in the form of mortgage bonds. These bonds are secured by a lien on the company’s property. The issuing corporation has a debt obligation to pay a fixed rate of interest and to repay the principal upon maturity. Maturities on corporate bonds can range from a few months to as long as 40 years. The principal amount is usually $1,000 with the coupon set on issuance.

CORPORATION: A separate fictional legal person or business, such as a clinic or hospital, legally incorporated under state laws that grant it a separate identity that is distinct from its owners, investors, shareholders, stockholders or stakeholders.

CORPUS: Latin term for body, or financial principle amount.

CORRECTION: Sharp reverse or downward movement in securities or commodities, prices, usually greater than 10%.

CORRECTIVE SUBSIDY: Amount paid to consumers of healthcare goods or services, equal to the marginal external benefit of the goods or services.

CORRELATION CO-EFFICIEnT: Statistical measurement of the relationship of two variables, usually securities or commodities.

corridor deductible: The name for the deductible that lies between the benefits paid by a basic health insurance plan and the beginning of the major medical benefits when a major medical plan is superimposed over the basic health plan.

COSIGNER: One who jointly signs a credit agreement with the principal borrower.

Cost: Inputs and/or expenses, both-direct and indirect, required to produce an intervention.

Resources used to produce a medical or other products, goods or services.

COST ACCOUNTING: Accounting field which supplies financial information to internal management for corporate decision making.

COST ALLOCATION: Assignment of funds for various corporate operational or support activities; budgeting.

COST-APPROACH: Costing method that adds a marginal charge of the price of an item, like a laboratory test or drug.

COST-AVOIDANCE: Ability of a healthcare or other organization to obviate the need for costs by operating in new ways.

COST-BASED REIMBURSEMEMT / PAYMENT (CBR/P): Medical care payment method based on provider costs, or those delivering the services.

COST-BASED SYSTEM: A method of medical payments that starts with the provider’s costs, as opposed to fees, as the starting point for reimbursement.

COST BASIS: The price paid for an asset including related fees and commissions.

COST BEHAVIOR: The relationship between costs and cost drivers.

Cost-Benefit Analysis: Analytical procedure for determining the economic efficiency of a program, expressed as the relationship between costs and outcomes, usually measured in monetary terms.

Cost Center: An organizational division, department, or unit performing functional activities within a facility; for each such center, cost accountability is maintained for revenues produced and for controllable expenses incurred.

COST-CONTAINMENT: Actions that control or reduce healthcare costs. The control or reduction of inefficiencies in the consumption, allocation, or production of health care services that contribute to higher than necessary costs. (Inefficiencies in consumption can occur when health services are inappropriately utilized; inefficiencies in allocation exist when health services could be delivered in less costly settings without loss of quality; and, inefficiencies in production exist when the costs of producing health services could be reduced by using a different combination of resources.)

Cost-Contract: An arrangement between a managed health care plan and (CMS) HCFA (CMS) under Section 1876 and/or 1833 of the Social Security Act, under which the health plan provides health services and is reimbursed its costs. The beneficiary can use providers outside the plan’s provider network.

COST DRIVER: Medical or healthcare events or service activities, that cause a cost to be incurred.

Cost Effectiveness: The efficacy of a program in achieving given intervention outcomes in relation to the program costs.

COST HIERARCHY: Expense levels ascribed to a healthcare organization or other business entity on a prioritized basis; budget.

Cost Minimization Analysis: An assessment of the least costly medical interventions among available alternatives that produce equivalent outcomes.

cost minimizing activity: Any method used in managed care to reduce healthcare expenses while not jeopardizing patient care, diagnosis or treatment.

COST OBJECT: Any medical product or service for which a cost is determined (patient exam, visit, test or intervention).

COST OF CAPITAL: The hurdle rate or required rate of return needed to embark on a capital business project.

COST OF DEBT: The interest rate paid on debt minus any tax savings.

Cost of Funds Index (COFI): Monthly weighted average cost of mutual or other funds for savings institutions that are members of the Federal Home Loan Bank System Eleventh District (San Francisco). COFI consists of the monthly weighted average cost to Bank members of savings, borrowings and advances.

COST OF GOODS (MANUFACTURED) AVAILABLE FOR SALE: The cost of finished healthcare goods, products or services for sale.

COST OF GOODS SOLD: The cost of inventory that a healthcare or other entity has sold to patients, customers or clients.

Cost Outlier: A medical case that is more costly to treat compared with other patients in a particular diagnosis related group. Outliers also refer to any unusual occurrence of cost, cases that skew average costs or unusual procedures.

COST OF GOODS USED: Amount or cost of supplies used to produce a medical service. It may be determined by the product of the numbers of Resource Value Units (RVUs) and RVU service costs.

Cost of Illness Analysis: An assessment of the economic impact of an illness or condition, including treatment costs.

cost of insurance: The cost or value of the actual net insurance protection in any year (face amount less reserve), according to the yearly renewable term rate used by a company on government published term rates. 

cost of living adjustment (COLA): A rider available with some health insurance and managed care policies that provides for an automatic increase in benefits, offsetting the effects of inflation.

COST OF RISK: A measurement of the total costs associated with providing health or managed medical care insurance, for the payer and/or underwriter.

COST PLUS APROACH/CONTRACT: Medical or healthcare good/service/product price or contract determination that includes a margin for the cost of that medical product, good or service.

COST POOL: A collection or aggregation of business expenses or costs by like-kind category.

COST (+) Approach:  Method of determining medical costs with a margin added for profit.

COST PUSH INFLATION: Healthcare inflation caused by the continual decrease in aggregate supply.

COST SHARING: Paying a portion of healthcare or disability costs, such as premiums, deductibles, and/or co-payments, etc. Payment method where a person is required to pay some health costs in order to receive medical care. The general set of financing arrangements whereby the consumer must pay out-of-pocket to receive care, either at the time of initiating care, or during the provision of health care services, or both. Cost sharing can also occur when an insured pays a portion of the monthly premium for health care insurance.

Cost Shifting: Charging one group of patients more in order to make up for underpayment by others. Most commonly, charging some privately insured patients more in order to make up for underpayment by Medicaid.

Cost-To-Charge Ratio: The quotient of cost (total operating expenses minus other operating revenue) divided by charges (gross patient revenue) expressed as a decimal.

COST-VOLUME-PROFIT-ANALYSIS: The inter-relationships among volume, profits and costs of goods or healthcare services.

COSTING: To determine the expense or cost of various healthcare products, goods or services.

COUNCIL OF ECONOMIC ADVISORS: A group of economists appointed by the president to provide insight, wisdom and counsel on economic policy, including the large healthcare sector.

COUNTER CYCLICAL STOCKS: Securities that tend to rise in value with a depressed economy and/or decrease in value with a rising economy.

COUPON: The amount of interest to be paid to a debt-holder; the interest rate.

COUPON BOND: A bond with physical paper coupons (tags) attached.

COUPON PAYMENT: The amount of money a bond-holder receives periodically that equals the coupon rate multiplied by the face value of the debt.

COUPON RAte: Rate of interest charged on a bond that is fixed.

COVARIANCE: Relationship of statistics between two variables (securities) times the standard deviation for each variable. The volatility of investments in relation to other investments.

COVENANT:  The legal provisions in a life, health, managed care or other insurance or debt contract.

COVERED LIFE: An insured patient, cohort unit or company.

COVERED OPTION WRITING: Selling an owned option.

COVERED SERVICES: Re-imbursable healthcare goods, products or medicals services and interventions under the terms and conditions of a health or managed care insurance contract.

COVENANTS OR BOND COVENANTS: The issuer’s enforceable promise to perform or refrain from performing certain actions. With respect to municipal securities, covenants are generally stated in the bond contract. Covenants commonly made in connection with a bond issue include covenants to charge fees sufficient to provide required pledged revenues (called a “rate covenant”); to maintain casualty insurance on the project; to complete, maintain, and operate the project; not to sell or encumber the project; not to issue parity bonds unless certain earnings tests are met (called an “additional bonds covenant”); and, not to take actions which would cause the bonds to be arbitrage bonds. *

COVERAGE APPROACH: A financial method that settles charges to cover future costs.

Coverage ratios: The number of times income will meet the fixed charges of bond interest and preferred dividends.

COVERED CALL WRITER: A seller of a call option who owns the underlying security upon which the option is written. A call writer is also considered to be covered if he holds, on a share-for-share basis, a call of the same class as the call written where the exercise price of the call held is equal to or less than the exercise price of the call written.

COVERED OPTION: An option contract backed by its underlying shares.

COVERED PUT WRITER: A writer of put options is covered only when the writer also holds a long put of the same class, with an equal or higher exercise.

CO-EFFICIENT OF VARIATION: The standard deviation divided by the mean average.

Co-movement: The degree to which an asset moves with other assets.

CO-ORDINATiON PERIOD: Occurs when private health insurance is the first payer, and Medicare is the secondary payer.

Co-Payment (Copay): A cost-sharing arrangement in which the HMO enrollee pays a specified flat amount for a specific service (such as $36.00 for an office visit or $18.00 for each prescription drug). The amount paid must be nominal to avoid becoming a barrier to care. It does not vary with the cost of the service, unlike co-insurance that is based on some percentage of cost. Supplemental cost sharing arrangement in which-an HMO enrollee pays a specified amount for a specific service.

Cost recovery: An income tax deduction sometimes called “depreciation.” Cost recovery is not dependent on the useful life of the property or its salvage value. The IRS lets the owner of a property, other than land or personal residence, make a tax deduction based on the then-current IRS tax code.

COUPON: (1) A detachable part of a bond which evidences interest due. The coupon specifies the date, place, and dollar amount of interest payable, among other matters. Some older coupons may be redeemed semi-annually, by detaching them from bonds and presenting them to the paying agent or bank for collection. (2) The term is also used colloquially to refer to a security’s interest rate.

COUPON BOND: A bearer bond, or a bond registered as to principal only, carrying coupons as evidence of future interest payments. Prior to June 30, 1983, most bonds were issued in coupon form. However, I.R.C. §103(j) essentially provides that, subsequent to that date, a long-term bond must be issued in registered form.

COUPON RATE: The same as the nominal yield rate.  The specified interest rate paid by a bond issuer.

COVER: To close out an open position. This term is used most frequently to describe the purchase of an option to close out an existing short position for either a profit or a loss.

Covered call: An option strategy in which a call option is written against a long stock (stock held in a client’s portfolio).

Covered option: An open short option position that is fully collateralized. If the holder of the option exercises, the writer of the option will not have a problem fulfilling the delivery requirements.

Covered put: An option strategy in which a put option is written against a sufficient amount of cash (or T-bills) to pay for the stock purchase if the short position is assigned.

COVERED SHORT: The purchase of commodities or securities to cover a short position.

CRAM DOWN: Slang term for the forced acceptance by stockholders of unfavorable terms in a corporate merger or acquisition.

Credit: Money received in an account from either a deposit or a transaction that result in increasing the account’s cash balance. With savings or checking accounts, an amount added to a savings or checking account balance, either through deposits or interest earned over time (debit); s another name for a loan.

CREDIT BALANCE: Account balance in a patients’ favor.

Credit History: A record of open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner.

CREDIT INSURANCE: Indemnification policy for unusual losses from unpaid ARs.

Credit Limit: The maximum one can borrow under a personal line of credit, home or business equity line of credit plan.

Credit Repository: An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals or businesses being considered for credit.

CREDIT RISK: Potential that a bond issuer will default.

Credit rating systems: The classification systems used to indicate the risk associated with a particular bond issue.

Credit Report:  A report of credit history prepared by a credit bureau and used by a lender in determining a loan applicant’s creditworthiness.

CREDITOR: An entity or person owed money for supplying funds, goods or healthcare services on credit.

CREEPING INFLATION: The slow rise in prices of healthcare or other goods, products and services that erodes their money value

CROSS ELASTICIY OF DEMAND: Used to measure the sensitivity of patient-consumer healthcare or other purchases to each one percent change in the price of related goods and services.

CROSS SECTONAL ANALYSIS: Financial analysis of firms in the same industry segment, such as those in the healthcare space.

CROWDING OUT: Heavy patient, consumer, business and federal borrowing during the same time period.

CUM DIVIDEND: With dividends.

CUM RIGHTS: With rights.

Cumulative Total Return: A measure of total value increase of an investment over time, assuming dividends and capital gains distributions are reinvested.

CUMULATIVE PREFERRED STOCK: Preferred stock issue that allows for the accumulation of any dividends not paid in prior years due to insufficient earnings. Note that these dividends will accrue and be paid in full in any year that the company wishes to pay common stockholders.

CUMULATIVE VOTING: Method of voting ones shares of common stock that allows the minority (small) shareholder to obtain a better representation on the Board of Directors. This representation is achieved by allowing the shareholder to cast his votes in any manner desired. To illustrate this, let’s assume ownership of 100 shares of XYZ and an election for 3 directors’ positions is being held. We would have a total 300 votes that could be cast in any manner. Thus, we could cast all 300 votes for one director’s position if we desired, or in any other way. This contrasts with the regular (statutory) voting method where we would have to distribute our votes evenly, meaning 100 votes for each of the 3 positions to be filled.

CURRENCY FUTURES: A contract for the anticipated future delivery of foreign exchange.

CURRENT ASSETS: Assets used or consumed within 12 months.  Cash plus any other assets that will be sold, converted into cash, or used during a hospital’s “cash conversion cycle”, or the cycle of cash to medical services, to third party insurance payer, and back to cash, again. Most commonly included with cash are marketable securities, patient accounts receivable and inventory.


current debt: Same as current liabilities

CURRENT INCOME: Money received from business operations, work effort, employment or other conscientious industry.

CURRENT LIABILITIES: As a rule, debts or obligations that must be met within a year. 

current interest rate: General term used to describe the interest rate of earnings credited to variable and universal life or health products (versus the fixed rate of traditional life or health insurance policies).

CURRENT LIABILITIES: As a rule, debts or obligations that must be met within a year.

On a stock, the annual dividend divided by the current ask price; on a bond, the annual interest dividend by the current market value. “What you get, divided by what you pay”.

CURRENT MARKET VALUE CMV): The worth of securities on an account on a particular day, and time.

CURRENT PRICE: The worth of a security on a particular day, and time. 

CURRENT RATIO: A liquidity measure to determine how easily current debt may be paid (current assets/current liabilities).

CURRENT YIELD: On a stock, the annual dividend divided by the current ask price; on a bond, the annual interest dividend by the current market value. “What you get, divided by what you pay”.

CUSIP NUMBER (COMMITTEE ON UNIFORM SECURITIES IDENTIFICATION PROCEDURES): An identification number assigned to each-maturity of an issue, which is usually printed on the face of each individual certificate of the issue. The CUSIP numbers are intended to help facilitate the identification and clearance of securities.

CUSTODIAN: A commercial bank, trust company or individual with certain qualifications that holds in safekeeping monies and securities owned by an investment company or other individual.

CUSTODIAN: Account held for the benefit of another, as in a child.

customary and reasonable charges: A basic concept used in health insurance to determine the benefit package in a major medical plan: to pay all reasonable and necessary medical costs, but not to pay excessive or unnecessary costs. Insurance companies and government providers may refuse to cover excessive expenses if they determine that charges made were not within customary and reasonable limits.

Customary ChargE: One of the screens previously used to determine a physician’s payment for a service under Medicare’s customary, prevailing, and reasonable payment system. Customary charges are calculated as the physician’s median charge for a given service over a prior 12-month period.

Customary, USUAL, Prevailing and Reasonable (CUPR): The method of paying physicians under Medicare from 1965 until implementation of the Medicare Fee Schedule in January 1992. Payment for a service was limited to the lowest of (1) the physician’s billed charge for the service, (2) the physician’s customary charge for the service, or (3) the prevailing charge for that service in the community. Similar to the usual, customary, and reasonable system used by private insurers.

CUT OFF POINT: The minimum rate of return in capital budgeting acceptable as an investment opportunity.

CUT OFF RATE: Hurdle rate.

cut rate: A health, life or other insurance premium charge that is below a scheduled rate.

Cycle, OPTIONS: The expiration dates applicable to the different series of options. Traditionally, there were three cycles:

  • January/April/July/October
  • February/May/August/November
  • March/June/September/December

Today, equity options expire on a sequential cycle that involves a total of four option series: two near-term months and two far-term months. For example, on January 1, a stock traditionally in the January cycle will be trading options expiring in January, February, April, and July. Index options, however, expire on a consecutive cycle that involves the four near-term months. For example, on January 1, index options will be trading options expiring in January, February, March, and April.

CYCLE BILLING: The time period in which ARs, invoices, premiums or other bills are periodically repeated and sent.

CYCLICAL INDuSTRY: A space whose profits and losses are tied to the macro-economic activity. Healthcare has traditionally been considered non-cyclical.

Cyclical stock: Stocks that tend to rise or fall quickly, corresponding to the same movements in the economic cycle. Automobiles and housing, for instance, are more in demand when consumers can afford high-ticket durables.


DAILY CENSUS: Mean census or patient population, per 24hour period.

Daily Compounding: Interest calculation in which interest is added to the principal each day. Interest is then earned on the new balance.

Daily Interest: Interest computed or assessed daily and based on the principal and interest left in the account each day; compound interest.

DAILY OPERATIONS: The customary and usual business activities of a healthcare or other business organization.

DAISY CHAIN: The trading of securities between stock market manipulators.

DATE OF ISSUE: Date on which a new stock is publicly issued or a bond is issued and effective.

DATE OF RECORD: Date of securities ownership in order to receive dividend payments.

DATED DATE: The date of issue printed on a security from which interest usually starts to accrue; even though the issue may actually be delivered at some later date

DAY ORDER: A transaction order that remains valid only for the remainder of the trading day on which it is entered. An individual in the securities business acting as a principal rather than as an agent. Dealers earn their profits from mark-up and mark-down, never a commission.

DAY TRADE: Sale and purchase of securities on the same day.

DAY TRADER: One who make repeated day trades.

Days in Accounts Receivable: Net accounts receivable divided by average revenue per day (gross patient revenue divided by days in the reporting period). This ratio indicates the time necessary to convert receivables into cash [net ARs / (net patient revenues / 365days)]; average AR collection period.

DAYS CASH ON HAND: The number of days a healthcare or other entity can cover using its most liquid assets [cash and marketable securities] / [(operating expenses-depreciation) /365 days].

DAYS SALES OUTSTANDING: ARs / Average  sales (revenue) per day.

DAYS SALES IN RECEIVALBLES: The average of net accounts receivable to one day’s sales revenues.

DEAD CAT BOUNCE: A sharp rise in a securities price, after a sharp drop.

DEALER: OTC market makers or principals who sell and buy various securities.

DEALER BANK: A bank which is engaged in the business of buying and selling government securities, municipal securities, and/or certain money market instruments for its own account.

DEALER MARKET: Securities transactions between principals or dealers.

DEALER SPREAD: The difference in the buy-sell price for securities dealers or principals.

DEATH BACK BOND: Debt backed by a life insurance policy.

DEATH VALLEY CURVE: The rapid use of capital by a small start-up firm, such as an emerging healthcare organization (EHO).

Debentures: A type of bond that is issued by hospital or other corporations. Debentures do not have a special lien on the corporation’s property, but the bondholders do have first claim on all assets not already pledged. Next are subordinated debentures, which have a claim on assets after the more senior debt is satisfied.

debit: A combination health or life insurance agent’s group of policy owners, from whom premiums are regularly collected. A debit book is the insurance agent’s list of active policy owners. The term also applies to the territory in which an agent collects premiums; an amount withdrawn or removed from a check or savings account balance; credit.

DEBIT BALANCE: Account balance with money owed by the buyer or patient, to the seller or healthcare provider.

Debit Card: A plastic card designed to give a customer access to funds in his/her checking account to obtain cash or purchase goods and services.

DEBT: Money owed or the left side of an account.

DEBT FINANCING: Borrowing money at an interest rate cost, instead of using equity financing.

DEBT LIMIT: The maximum amount of debt that an issuer of municipal securities is permitted to incur under constitutional, statutory or charter provisions. The debt limit is usually expressed as a percentage of assessed valuation

DEBT RATIO: Total debt / total assets

DEBT RATIOS: Comparative statistics showing the relationship between the issuer’s outstanding debt and such factors as its tax base, income or population. Such ratios are often used in the process of determining credit quality of an issue, primarily on general obligation bonds. Some of the more commonly used ratios are (a) net overall debt to assessed valuation, (b) net overall debt to estimated full valuation, and (c) net overall debt per capital.

DEBT RETIREMENT: To pay off, satisfy or amortize a loan.

DEBT SERVICE: The amount of money necessary to pay interest on an outstanding debt, the principal of maturing serial bonds and the required contributions to a sinking fund for term bonds. Debt service on bonds may be calculated on a calendar year, fiscal year, or bond fiscal year basis. Debt service coverage may be calculated as: [excess of revenues over expenses + interest expenses +depreciation expenses) / (interest expense + principle payment)]

DEBT SERVICE RESERVE FUND: The fund in which moneys are placed which may be used to pay debt service if pledged revenues are insufficient to satisfy the debt service requirements. The debt service reserve fund may be entirely funded with bond proceeds, or it may only be partly funded at the time of issuance and allowed to reach its full funding requirement over time, due to the accumulation of pledged revenues. If the debt service reserve fund is used in whole or part to pay debt service, the issuer usually is required to replenish the funds from the first available funds or revenues. A typical reserve requirement might be the maximum aggregate annual debt service requirement for any year remaining until the bonds reach maturity. The size and investment of the reserve may be subject to arbitrage regulations. Under a typical revenue pledge this fund is the third to be funded out of the revenue fund

DEBTS TO ASSETS: Financial ratio of total liabilities, divided by total assets of a healthcare or other organization.

DEBT TO EQUITY RATIO: Total liabilities divided by total stockholder (owner’s) equity.

DEBT SUPPLIER: A vendor who accepts a debtor’s claim in exchange for supplied capital (funds).

DEBTOR: Company, patient, customer, client or individual that owes money.

DECIMAL TRADING: Securities trading in decimal increments, rather than 1/8s.

DECLARATION DATE: The time set for the corporate board of directors’ meeting at which a dividend distribution is announced.

DEDUCTIBLE: Provision or clause in an insurance contract that the first given number of dollars, or percentage, or expenses will not be reimbursed or covered. (1) The amount paid by the patient for medical care prior to insurance covering the balance. (2) A type of cost sharing where the insured party pays a specified amount of approved charges for covered medical services before the insurer will assume liability for all or part of the remaining covered services. (3) Cumulative amount a member of a health plan has to pay for services before that person’s plan begins to cover the costs of care.

Deductible Carry-Over: A life or health insurance policy feature whereby covered expenses in the last three months of the year may carry over to be counted toward the next year’s deductible.

deductible carry over credit: Last quarter deductible that may be used for the next year.

deductible coverage: A health insurance policy provision stipulating that only the loss in excess of a minimum figure is covered.

deductible coverage clause: A provision in a health insurance policy that states that, in return for a reduced rate, the insured will assume losses below a specified amount. In a health insurance policy, for example, that portion of covered hospital and medical charges that an insured person must pay before the policy’s benefits begin.

DEDUCTION: An expenditure subtracted from AGI to reduce taxable income.

DEFAULT: Breach of some covenant, promise to duty imposed by the bond contract. The most serious default occurs when the issuer fails to pay principal, interest, or both, when due. Other, “technical” defaults result when specifically defend events of default occur, such as failure to perform covenants. Technical defaults may include failing to charge rates sufficient to meet rate covenants or failing to maintain insurance on the project. If the issuer defaults in the payment of principal, interest, or both, or if a technical default is not cured within a specified period of time, the bondholders or trustee may exercise legally available rights and remedies for enforcement of the bond contract.

DEFAULT RISK: Possibility of default.


DEFEASANCE: The nullification of certain financial contracts when specific acts are performed as outlined in the terms and conditions statements.

DEFENSIVE STOCK: A stock that, because of the nature of the business represented, is believed likely to hold up relatively well in declining markets. Examples include public utilities, some healthcare organizations and hospitals, and basic foodstuffs.

DEFERRED ANNUITY: An annuity in which the annuitant wishes to allow earnings received into the separate account during the accumulation phase to accrue tax deferred until some future time.

Deferred compensation: A nonqualified compensation plan, often tied to an executive bonus plan, allowing for payments in the future, such as retirement.

Deferred expenses: Business expenditures that are planned to occur several years in the future and usually requiring large outlays of cash.

Deferred Interest: Interest delayed when a minimum monthly payment is not large enough to pay all the interest that has accrued on a loan for a specific period. The unpaid interest is added to the outstanding principal balance to be repaid over the remaining life of the loan. To avoid deferred interest, a borrower sometimes has the option of making a larger payment that includes what would otherwise become deferred interest.

DEFICIENCY LETTER: SEC written notice for the expansion or correction of a securities prospectus.

DEFICIT: The debt balance of a retained earnings account.

DEFICIT SPENDING: Excess of expenditures over revenue income.

Defined benefit PENSION plan: A traditional pension plan where benefit is defined in a formula that is often based on the final years of employment. The benefit is paid as a single life annuity for single clients without dependents. A qualified retirement plan that suggests the total amount of money received at retirement.

Defined contribution PENSION plan: A popular retirement benefit for healthcare workers and employees. The most popular version of this type of plan is the 401(k) plan. The amount of contribution is defined, not the final benefit. The final benefit depends on how well an employee’s investments perform. Another important feature is that the employee must choose the investments to which to allocate his or her contributions (and often the employer’s contributions). Plans typically offer three or more selections, and the employee decides on the percentage of money to be invested in each.

DEFLATION: A sustained period of falling interest rates, prices and economics.

DEFLATOR: Mathematical factor used to convert current dollar amounts into inflation adjusted dollar amounts.

DEGREE OF LEVERAGE: The amount of profits derived from products/services/sales, in percentage terms.

Delinquency: Failure to make debt/bond payments when due.

Delivery: The process of meeting the terms of a written option when notification of assignment has been received. In the case of a short call, the writer must deliver stock and in return receives cash for the stock sold. In the case of a short put, the writer pays cash and in return receives the stock purchased

DELIVERY DATE: Same as the security settlement or delivery date.

DELIVERY vs. PAYMENT (DVP): A method of settling transactions whereby payment on the transaction is made when the securities involved in the transaction are delivered and accepted. The term is often used to refer specifically to a transaction settled in this manner where a customer (typically an institutional investor) has purchased securities from a dealer. The term is also used generally to refer to all types of transactions settled in this way.

DELTA: Relationship between the price of an option and its underlying futures contract or stock price.

DEMAND: Relationship between the price of a healthcare item or service, and the quantity demand.

Demand curve: Graphical relationship between quantity demanded and healthcare product or service price.

DEMAND DEPOSITS: Checking accounts and bank deposits subject to demand withdrawal.

DEMAND LOAN: A debt due on demand without a maturity date.

DEMAND PULL INFLATION: Healthcare or other product. Good or service price rise caused by the increase in aggregate demand.

DEMAND SCHEDULE: Tabular depiction of how the quantity demanded of healthcare goods and services would change with price, given all other healthcare demand determinants.

DENOMINATION: The par value amount represented by a particular securities certificate. Bearer bonds are typically issued in denominations of $1,000 or (more commonly) $5,000 par value per certificate. Registered bonds are typically issued in variable denominations, multiples of $1,000 up to $100,000 or more per certificate (although denominations of larger than $100,000 are not acceptable for delivery purposes between dealers unless specifically identified as such at the time of trade). Notes are typically issued in denominations of $25,000 or more per certificate.

DEPOSIT: Posting money or near-money in the bank for payment of healthcare products, goods or services rendered.

DEPOSIT-IN-TRANSIT: A deposit not yet in the bank; or float.

Deposit ticket: A recorded paper trail for a deposit.

DEPOSITORY: A clearing agency registered with the Securities and Exchange Commission (SEC) that provides mobilization, safekeeping, and book-entry settlement services to its participants. The four registered depositories are The Pacific Securities Depository Trust Company (San Francisco), The Depository Trust Company (New York), The Midwest Securities Trust Company (Chicago), and The Philadelphia Depository Trust Company.

DEPRECIATION: Decreasing value or wasting away, as in depletion over time. Or, the continuous decline in the value of a healthcare company’s buildings, instruments and equipment in the course of its operations. It is an item of expense through which the money paid for the plant and equipment is shown as having been spent in installments over the productive lifetime of the plant or equipment. May be considered a non-cash expense.

DEPRECIATION AMOUNT: The portion of an asset subject to accounting rules regarding depreciation or asset wasting.

DEPRECIATION LIFE: The time period over which the depreciable cost of an asset is expensed.

DEPRECIATION TaX SHIELD: The inflow of funds that provide tax reduction in the amount of taxes owed.

DEPRESION: A long period of general economic malaise and decline.

DEPRESSED MARKET: A long period of economic malaise and securities decline.

DEPTH OF MARKET: The number of securities that can be sold without substantially affecting market price.

Derivative: Derivatives are financial arrangements between two parties whose payments are derived from the performance of an agreed-upon benchmark. They can be issued based on currencies, commodities, government or corporate debt, home mortgages, stocks, interest rates, or any combination of the above. The primary purpose of derivatives is to hedge investment risk. In the case of debt securities, derivatives can swap floating interest-rate risk for a fixed interest rate. Because the possibility of a reduced interest rate is the most important risk to the investor’s capital, coupled with changes in currency values, derivatives can be an important investment tool. Derivatives can be risky if they involve high leverage: Both parties to the transaction are exposed to market moves with little capital changing hands. Remember, when the market moves are favorable, the leverage provides a high return compared with the relatively small amount of investment capital actually at risk. However, when market moves are unfavorable, the reverse is true: Enormous losses may be incurred. International healthcare corporations are major investors in derivatives, because exports can suffer upon currency fluctuations or the corporations want to change a floating rate liability to a fixed-rate obligation. However, even though corporations were originally the main purchasers of derivatives (primarily because of the high minimum transaction size), the opportunity is now available for some individuals to take advantage of the benefits of derivatives. This is done primarily through private partnerships (not generally available to the public.)

DRERIVATIVE PRICING MODEL: Theoretical determination regarding options and other derivatives useful in evaluating their market value.

DERIVED DEMAND: Demand for a healthcare input derived from demand for the product that the input is used to produce or serve.

DESIGNATED ORDER: An order for securities held in a syndicate that is submitted by an account member on behalf of a buyer on which all or a portion of the takedown is to be credited to certain members of the syndicate. The buyer directs who will receive the designation and what percentage of the total designation each member will receive. Generally, two or more syndicate members will be designated to receive a portion of the credit.

DEVALUATION: The decline in the value of one currency over another.

DIALING AND SMILING: Emotional tone of a stock broker when cold calling unsuspecting sales prospects.

DIFFERENTIAL: Brokerage transaction fee for odd lot stock purchases.

DIFFUSION PROCESS: The dissemination of a healthcare innovation, drug or technique, etc, form entity to entity or practitioner to practitioner.

DILUTION: The decrease in earnings per share because of new securities issuance.

Dilutive effect: The lowering of the book or market value of the shares of a company’s stock as a result of more shares outstanding. A company’s initial registration may include more shares than are initially issued when the company goes public for the first time. Later, an issue of more stock by a company (called a “primary offering,” distinguished from the “initial public offering”) dilutes the existing shares outstanding.  Also, earnings-per-share calculations are said to be “fully diluted” when all common stock equivalents (convertible securities, rights, and warrants) are included. “Fully diluted” numbers are used in analysis when there is a likelihood of conversion or exercise of rights and warrants.

DIMINISHING MARGINAL RATES OF SUBSTITUTION: The marginal rates of substitution of healthcare service A for B, that will tend to decline as more A is substituted for B, along any patient’s indifference curve.

DIMINISHING MARGINAL RETURNS: The mathematical and economic concept that incremental healthcare value is inversely related to existing quantities prior to the value added increment.

DIRECT COST: The cost of a medical service that can be directly traced to a specific patient or medical service; the opposite of an indirect cost.

DIRECT DEBT: The sum of the total bonded debt and any short-term debt of the hospital or other issuer. Direct debt may be incurred in the issuer’s own name or assumed through the annexation of territory or consolidation with another governmental unit.

Direct Deposit: Automatically placed funds to checking or savings accounts via a pre-authorized system. Some types of Direct Deposits are Social Security, SSI, VA benefits, annuities, pension benefits, payroll checks and dividend checks.

DIRET FINANCING: Financing, especially as with a loan or debt, arranged without a third party intermediary.

DIRECT INVESTMENT: Investing, especially as with a securities purchase, arranged without a third party intermediary.

DIRECT ISSUE: The sale of commercial corporate paper (debt) arranged without a third part intermediary.

DIRECT LABOR: Compensation of traceable labor employee costs.

Direct method: Cash flow format for operating activities that list major categories of cash receipts and disbursements.

DIRECT OVERHEAD: Pro-rata overhead expenses, also known as the burden rate, built into the cost of goods sold.

DIRECT PLACEMENT: Securities sales, between two investors, arranged without a third party intermediary.

DIRECT PURCHASE: Purchase of an open ended company directly from the mutual fund, without a third party sales intermediary like a broker.

DIRECT PARTICIPATION PROGRAM (DP PROGRAM; DPP): A group investment structured so that investors are direct recipients of all tax consequences. Also known as a Tax-Advantaged Investment (TAI).

DIRECT ROLLOVER: Qualified plan distribution directly to a custodian or other trustee.

DIRECT WRITE-OFF: A credit department-type decision to forfeit an uncollectible account.

DIRECTOR: One elected by stakeholders to determine the policy and procedures of a healthcare or other corporation.

DISBURSEMENT: A monetary payout to discharge or reduce a debt.

disbursement float: The amount of time between medical goods or services provided, and payment in a healthcare organization or other system.

DISCHARGE OF BANKRUPTCY: A legal or Court order terminating a bankruptcy proceeding.

DISCLOSURE PRINCIPLE: The suggestion that financial statements should be detailed enough for outsiders to make informed decisions about the firm.

DISCOUNT: A reduction in premium payments or medical products, goods or service costs.  The percentage or dollar amount below net asset value at which a closed-end company may sell (opposite of premium).  The sale of a bond below its par value.

DISCOUNT BOND: A bond that sells below its face amount; usually because interest rates have risen since issue. A decline in the credit standing of the issuer will frequently cause the bond’s price to drop as well. Some bonds are originally offered at a discount.

DISCOUNT BROKER: A stock broker or brokerage firm that charges lower commissions than a full service equivalent.

DISCOUNT DRUG LIST: Certain drugs that are available for a reduced price from a drug manufacturer

DISCOUNT FROM NET-ASSET VALUE: The amount a closed-ended fund sells below its net asset value (NAV).

DISCOUNT FOR LACK OF CONTROL. Amount reduced in the economic interest of a business entity for the inability to steer policy or management.

DISCOUNT FOR LACK OF MARKETABILITY. Amount reduced in the economic interest of a business entity reflected in a lack of promotional or advertising endeavors.

DISCOUNT FOR LACK OF VOTING. Amount reduced in the economic interest of a business entity reflected in a lack or reduction of voting rights.

Discount points: Payment made to a lender at the inception of a loan for the purpose of reducing the interest rate of a loan. Each point is equal to one percent (1%) of the loan amount (i.e., three points on a $100,000 mortgage would equal $3,000).

DISCOUNT RATE: The amount of interest that Federal Reserve Banks (FRBs) charge their member banks for overnight loans, OR, rate of return factor used to convert present money value into the future value of money.

Discount stock option: A right given that allows an employee to purchase shares of employer stock at a price that is substantially below the stock’s market value on the date the option is granted.

DISCOUNTED CASH FOWS: The adjusted cash flow to reflect present-value for the cost- of-capital, over time.

DISCOUNTED FUTURE EARNINGS: Income approach valuation method converting the present value of future economic business entity using a discount rate.

DISCOUNT RATE: Financial return to compensate for financial risk taking in a business project to mitigate the lost opportunity cost of holding money or investing in another project.

Discounted Fee-For-Service: The agreement between a medical provider and payer that is less than full-fee. This may be a fixed amount per service, or a percentage discount. Providers generally accept such contracts because they represent a means to increase their volume or reduce their chances of losing volume.

DISCOUNTED PRESENT VALUE: The present value of money to be received in the future.

Discounting: The treatment of time in valuing costs and benefits, that is, the adjustment of costs and benefits to their present values, requiring a choice of discount rate and time frame. The process of determining present value.

DISCRETIONARY ACCOUNT: An account in which the customer authorizes in writing a registered representative to use his judgment (completely, or within limits) in buying and selling securities including selection, amount, and price. However, judgment as to time and/or price only is not considered discretion.

DISCRETIONARY INCOME: The extra money available after all bills have been paid.

DISCRETIONARY ORDER: An order that empowers a registered representative (stock broker) with a discretionary account to use his own judgment on the customer’s behalf with respect to choice of security, quantity of security and whether any such transaction should be a purchase or sale.

DISECONOMICS OF SCALE: An increase in the average cost of healthcare entity operations resulting from managerial difficulties in large scale business enterprises.

DISHONORED NOTE: Failure to pay or default on a note; bounced check.

DISINFLATION: A sharp reduction in the annual rate of healthcare product or services inflation.

DISINTERMEDIATION: The removal of a third party intermediary in a securities, business, economic or other transaction.

DISINVESTMENT: The reduction in capital investment through the disposition or sales of goods, equipment or other assets.

DISPERSION: Deviation from the norm, average or mean.

DISPOSABLE INCOME (DI): Ability to spend or save after the payment of income taxes.

DISSOLUTION: The termination of a partnership, corporation or other agreement.

DISTRIBUTION DATE: The date when a dividend is paid to shareholders.

DISRIBUTION STAGE: The period of disbursement for an annuity.

DISTRESS SALE: The sale of assets under less than ideal conditions, for less than current value.

DISTRIBUTOR: A person or company that purchases open-end investment company shares directly from the issuer for re-sale to others.

DIVERSIFICATION: Investment in a number of different security issues for the purpose of spreading and reducing the risks inherent in all investing.

DIVERSIFIED COMMON STOCK FUND: A diversified management company that invests substantially all of its assets in a portfolio of common stocks in a wide variety of industries

DIVERSIFIED MANAGEMENT COMPANY: A management company that has at least 75 percent of its assets arranged so as to not own securities of one issuer having a value greater than 5 percent of the management company’ s total assets and to not own more than 10 percent of the voting securities of any corporation. There are no restrictions placed upon the other 25 percent of the company’s assets. And so, up to 30 percent of assets could be in one stock.

DIVESTITURE: The outright sale of assets, or inventory.

Dividend: Partial premium return when insurance earnings exceed costs. Or, a portion of corporate profit paid back to stockholders.

DIVIDEND REINVESTMENT PLAN: The reinvestment of cash dividends into stocks.

DIVIDEND YIELD: Ratio of current dividend to the current price of a stock share.

DIVIDENDS: Distributions to stockholders earned and declared by a corporate healthcare or hospital board of directors.

DIVISION OF LABOR: The separation of larger healthcare service projects, into smaller individual tasks, by worker’s who specialize in those tasks.

DIVIDED ACCOUNT (WESTERN ACCOUNT): A method for determining liability stated in the agreement among underwriters in which each member of an underwriting syndicate is liable only for the amount of its participation in the issue, and not for any unsold portion of the participation amounts allocated to the other underwriters

DIVISOR: A mathematic factor to adjust stock splits that would otherwise distort comparisons.

DOGS OF DOW: The ten best yielding equities of the DJIA, and usually purchased over rolling annual periods.

DOING-BUSINESS-AS: Fictitious non-legal name of a person or business actually conduction transactions.

DOLLAR BEARS: One who believes the US dollar will decrease in value against foreign currencies.

DOLLAR BOND: A colloquial term for a bond that is usually quoted and traded in terms of dollar price rather than yield. Dollar bonds art generally more actively traded securities from larger, term issues rather than securities from serial issues.

DOLLAR COST AVERAGING: Investing equal amounts of money at regular intervals regardless of whether the stock market is moving upward or downward. This reduces average share costs by automatically acquiring more shares in periods of lower securities prices and fewer shares in periods of higher prices. This does not assure a profit or protect against depreciation in declining markets.

DONATION: Restricted or unrestricted funds provided without the need for repayment.

Donative intent: The inclination of a donor to make a gratuitous gift to charity.

DONOR: One who makes a gift to another.

DO NOT REDUCE (DNR) ORDER: A buy limit or a sell stop order that is not to be reduced by the amount of a cash dividend on the ex-dividend date as the customer specifically so requested.

DOUBLE-BARRELED BOND: A General Obligation bond secured by both a defined source of revenue (other than property taxes) plus the full faith and credit of an issuer that has taxing powers. The term is occasionally, although erroneously, used in reference to hospital bonds secured by any two sources of pledged revenue.

Double declining balance: A method of accelerated depreciation that multiplies the assets decreasing book value by constant percentage that is two fold the straight line depreciation rate.


Double Tax-Free Income: Income that is exempt from both federal and state income taxes.

DOUBLE WITCH: The exact date that two related classes of futures and options expire.

DOW JONES INDUSTRIAL AVERAGE (DJIA): A market average indicator consisting (individually) of thirty industrial, twenty transportation, or fifteen public utility common stocks; the composite average includes these sixty-five stocks collectively.

DOW THEORY: A theory predicated on the belief that the rise or fall of stock prices as measured by the Dow Jones Industrial average is both a mirror and a forecaster of business activities.

DOWNGRADE: The lowering of a securities rating by a rating firm, which increases the cost of debt or interest rate.

DOWN PAYMENT: A portion of the upfront payment price to reduce an outstanding purchase balance.

DOWNSIZE: A reduction in healthcare entity or business size and complexity, but especially a reduction in work force quantity.

DOWNSTREAM: Flow of assts, people, money, intellectual capital, or management directives from upper corporate echelons to the rank-and-file.

DOWN TICK: The sales of securities at a price lower than the preceding sale.

DOWN TURN: The lowering of a market or economic cycle.

DRESSING-UP POFOLIOS: The purchase or sales of securities by money managers at the end of a time period, usually annually, in order to enhance appearances at the reporting period.

DROP DEAD DAY: The absolute final deadline; usually for payment.

DUE BILL: A legal document that evidences the transfer of title to stock and/or dividends. It must be attached to certificates delivered too late for effective transfer, and will ensure distribution of dividends to the new and rightful owner.

DUE DILIGENCE MEETING: A meeting between corporation officials and the underwriting group to discuss and review detailed information in the registration statement, prepare a final prospectus, and begin negotiation for a formal underwriting agreement. This meeting is held shortly before the anticipated effective date.

Due on Sale: A clause in a debt agreement providing that, if the debtor (borrower) sells, transfers, or, in some instances, encumbers the asset, the lender has the right to demand the outstanding balance

DUMPING: The sales of goods and services abroad, at prices below cost, in order to reduce a surplus or gain competitive advantage; OR patient transfer to another medical provider or healthcare facility because of an inability to pay for care rendered.

DUN & Bradstreet (DB): A for-profit credit information firm.

DU PONT SYSTEM: EI Du Pont de Nemours Company method for determining Return on Assets (ROA) financial performance, by multiplying asset turnover (revenues divided by assets), by return on sales (net income divided by net sales).

DURABLE GoODS: Equipment or instruments with a useful life, and similar to durable medical equipment (DME).

Duration: The average time to collect a bond’s principal and interest payment. A measure of volatility, expressed in years, taking into consideration all of the cash flows produced over the life of a bond. For example, if the duration of a bond is five years, then the price of the bond changes 5% for every 1% change in interest rates.

DUTCH AUCTION: Auction market where price is reduced until sold (US T-bill system).

DUTY: A tariff, import, export or consumption tax.

DUTY TO ACCOUNT: Obligation to keep factual and accurate financial records and return funds to owners.



EACH WAY: Stock broker commission made on both the buy and sell side of a securities transaction.

Early exercise: A feature of American-style options that allows the holder to exercise an option at any time prior to the expiration date.

EARN-OUT: Payments not part of the initial acquisition cost of a firm and based on future earnings.

EARNED INCOME: Income derived from the active participation in a trade or business, such as a medical practice, or healthcare entity

EARNED SURPLUS: Income kept in a healthcare or other business and not distributed to owners or shareholders. It is also referred to as retained income and as earnings retained in the business.

EARNEST MONEY: A good faith deposit for a transaction.

EARNING ASSET: An income producing asset

EARNINGS: Profit or income from a healthcare or other enterprise.

EARNINGS BEFORE TAXES: Business or corporate profit before taxes; after bond and debt-holder interest payments have been paid.

EARNINGS MOMENTUM: A trend of increasing earnings per share.

EARNINGS MULTIPLIER: The Price / Earnings ratio.

Earnings momentum investing: A style of investing that looks for emerging healthcare or other companies that are on growth trends similar to a growth style. Two nuances differentiate these two styles: (1) the earnings momentum style focuses mainly on the growth of the earnings of the company and (2) the earnings momentum style looks for an accelerating increase in the growth of earnings.

EARNINGS PER PREFERRED SHARE (EPPS): total earnings divided by total preferred shares outstanding.

Earnings per share (EPS):  The amount of a company’s profit available to each share of common stock. EPS = Net income (after taxes and preferred dividends) divided by Number of outstanding shares.

EARNINGS PRICE RATIO: The ratio relationship of earnings per share (EPS) to current stock price.

EARNINGS REPORT: Earnings per share report of a public company for the latest accounting period.

EARNINGS SURPRISE: An earnings report that is either better or worse than expected by analysts.

EASTERN ACCOUNT: An undivided brokerage account.

EATING STOCK: An underwriter unable to find buyers for securities and who must purchase them for its own account.

ECONOMIC BENEFITS: Inflows from a healthcare or business entity, such as cash, insurance payments, ARs, Medicare/Medicaid, etc.

ECONOMIC COST: The money value of all inputs in a healthcare activity or business enterprise over a period of time.

ECONOMIC CREDENTIALING: Evaluating a physician’s economic and professional financial behavior (i.e. tests ordered, hospital bed days, outcomes, etc.) in deciding upon medical staff appointment or re-appointment.

ECONOMIC EXCHANGE: Transaction in which two or more parties exchange something of value.

ECONOMIC GROWTH: Expansion in the general economy or healthcare services production as measured by the annual percentage increase in GNP, currently about 15%.

ECONOMIC INDICATORS: Key statistics that estimate the direction of the economy or specific sector, such as healthcare.

ECONOMIC LIFE: The period of time in which a healthcare organization may generate financial benefits.

ECONOMIC ORDER QUANTITY (EOQ): The optimal or least costly quantity of inventory (DME) which should be purchased, and on what schedule.

ECONOMIC PROFIT: The difference between total healthcare revenue and the cost of all related inputs used by an entity over time; Net Present Value (NPV).

ECONOMIC RENTS: Healthcare product, goods or service earnings that exceed the opportunity costs of the business enterprise.

ECONOMIC RESOURCES: Healthcare inputs used in the process of healthcare services production or delivery.

ECONOMIC RISK: Securities looses trigged by domestic or international events.

ECONOMIC VALUED ADDED (EVA): Concept that combines finance and accounting income to determine healthcare entity corporate operations value.

ECONOMICS, HEALTHCARE: The formal study of resource generation, use and allocation in the healthcare industrial complex.

ECONOMIES OF SCALE: Reduction in healthcare production unit costs from an increased size in business operations.

ECONOMY, HEALTHCARE: The mechanism through which the use of doctors, nurses, labor, land, vehicles, equipment, instruments, buildings, drugs and other physical and cognitive resources are organized to meet the healthcare demands of patients in a society.

EFFECTIVE DATE: The date on which a security can be ordered publicly if no deficiency letter is submitted to the issuer by the SEC. It is generally no earlier than the twentieth calendar day after filing the registration statement; OR, the date on which a healthcare business entity valuation/appraisal Opinion of Value is made.

Effective Interest Rate: The cost of credit on a yearly basis expressed as a percentage. Includes up-front costs paid to obtain the debt, and is, therefore, usually a higher amount than the interest rate stipulated in the debt.

EFFICIENCY: The measurement and maximization of healthcare economic inputs versus healthcare outputs.

EFFICIENT CAPITAL MARKETs: A market that fully reflects all public information.Efficient frontier: A leading line that represents the highest rate of return for each particular mix of assets in a portfolio.

Efficient market HYPOTHESIS (theory): Belief that all market prices and movements reflect all that can be known about an investment. If all the information available is already reflected in stock prices, research aimed at finding undervalued assets or special situations is useless.

EFFICIENT PORTFOLIO: The most return possible for a given level of risk.

EITHER / OR ORDER: An order consisting of a limit and a stop for the same security at different prices. Execution of one order will cancel the other.

ELASTICITY: Responsiveness of patients and healthcare providers to a change in price or fee schedule.

ELASTIC DEMAND: Occurs when the price of elasticity of demand for healthcare goods, products or services exceed one (1) unit.

ELASTIC SUPPLY: Occurs when the price of elasticity of supply for healthcare goods, products or services is greater than one (1) unit.

ELECTRONIC BILLING: Medical, DME and related health insurance bills or premiums submitted though EDI (non-paper claims) systems.

ELECTRONIC FUNDS TRANSFER (EFT): The non-paper based transfer of funds by electronic means.

ELECTRONIC MEDICAL CLAIMS: This term usually refers to a flat file format used to transmit or transport medical claims, such as the 192-byte UB-92 Institutional EMC format and the 320-byte Professional EMC NSF.

ELECTRONIC REMITTANCE ADVICE: Any of several electronic formats for explaining the payments of health care claims.

ELEPHANTS: Slang term for large institutional investors.

Eligible Expenses: Reasonable and customary charges for health care services incurred while coverage is in effect.

ELLIOT, RALPH NELSON; WAVE: Theory of technical analysis suggesting that financial markets and other human endeavors run in cycles with a ratio of 5:3; advancements to declines.

ELVES: Slang term for an unofficial group of technical analysts (TAs) and financial forecasters.

EMANCIPATION: The ability and freedom to assume certain legal responsibilities associated with adulthood.

Emerging growth stocks: Shares of early healthcare or other companies participating in new markets or niches with greater future expectations than those in established industries or services. Companies are usually smaller and do not yet have steady earnings streams or pay dividends. They may be more highly priced relative to the rest of the market.

EMERGING MARKETS: Developing foreign countries and their associated economies and securities markets.

Employee stock ownership plan (ESOP): A healthcare entity benefit plan that offers company stock as the investment. Available plans are leveraged ESOPs, which are highly complex financial arrangements, usually in the form of profit-sharing.

Employee stock-purchase plan: A plan that allows a broad spectrum of hospital or healthcare employees to purchase employer securities at a discount of up to 15% of the stock’s fair market value.

EMPLOYER COST INDEX: Department of Labor (DOL) quarterly report of domestic wages and benefits adjusted for inflation.

Employer securities: Generally, common stock of the healthcare company that is also the employer of the stockholder.

ENCUMBERED: Subject to the terms and conditions of a valid claim by another.

Encumbrance: A claim against an asset by another party which usually affects the ability to transfer ownership of the asset.

ENDING INVENTORY: The amount of DME and/or other healthcare related inventory on hand at the end of an accounting period.

ENDORSE: To impart or transfer credibility to another; an imprimatur of respect.

ENDORSEMENT: A signature on the back of a check or security by the person named by the check, stock or bond as owner.

ENDOWMENT: Principal financial corpus with interest payments usually only available for disbursements, gifts, scholarships, research, etc.

ENTERPRISE: A small but growing business, such as an emerging healthcare organization (EHO).

ENTITLEMENT: Program (federal, state or local) in which medical care and health services benefits are provided to those who qualify.

ENTITY: A healthcare or medical organization that produces medical goods or services for sale in an attempt to make a profit.

ENTRY-LIMIT PRICE: Price sent by healthcare business enterprises that are low enough to prevent new entrants from entering the marketplace.

EOM DATING: Wholesale drug industry practice where purchases made by the 25th of one month, are payable within 30 days of the following end-of-month

EQUIPMENT TRUST BOND: A bond collateralized by machinery and/or equipment of the issuing healthcare corporation, many times used by railroads to finance the purchase of their rolling stock.

Equal Credit Opportunity Act (ECOA): Federal law that requires lenders and creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

EQUILIBRIUM: The stabilization point where healthcare economic variables neither increase, nor decrease.

EQUILIBRIUM PRICE: The price that equilibrate to supply and demand.

EQUI-MARGINAL PRINCIPLE: The suggestion that to maximize utility, a patient-healthcare consumer must equalize the marginal utility per dollar, spent on each healthcare good or service.

Equipment trust certificates: These instruments have a direct claim on healthcare entity equipment and instruments. Should the issuer default, the assets could be resold and the proceeds used to retire the debt.

EQUITY: The ownership interest of common and preferred stockholders in a healthcare company. The term also refers to the excess of value of securities over the debit balance in a margin (general) account. The money-value of property or interest in property after all claims have been deducted. In connection with cash values and policy loan indebtedness, the policy owner’s equity is the portion of cash value remaining to the policy owner after deduction of all indebtedness on account of loans or liens secured by the policy. As a principle of insurance, fair and impartial treatment; the principle that insurance premiums shall be set according to the degree of risk assumed and the benefits granted. In insurance law, equity is the name given to the rules and decisions that originated with equity courts, from those that were handed down by law courts dealing with the common law and statute law. The importance of equity in cases concerning insurance lies in the fact that equitable remedies may be available when the legal remedy may not be adequate for the injured party.

EQUITY FINANCING: The purchase of an asset with internally generated funds, such as cash, or stock; equity supplier.

Equity Fund: A portfolio that invests primarily in stocks.

EQUITY FUNDING: Combination of a mutual fund with a life insurance policy.

EQUITY KICKER: Ownership position potential in a loan (debt) deal.

Equity Line of Credit (ELOC) – Generic term that allows conversion of home or business equity, to cash.

EQUITY NET CASH FLOWS: The cash available for owners after funding healthcare or other business operations.

Equity option: An option on a common stock.

EQUITY RISK PREMIUM: The risk-free rate-of-return, plus the rate-of-return to reflect the risk of the healthcare business entity over the risk-free-rate.


EQUIVALENT UNITS: A period of work measure expressed in complete units of service or goods output.

ESCALATOR CLAUSE: Terms and conditions in a health insurance or other contract that allows inflation or other cost increases to be passed on.

ESCHEAT: Property retuned to the State of a person if abandoned or left by who dies intestate, or without a will.

ESCROW: A third party intermediary agent.

Escrow Account (Impound Account):  An account that a borrower pays into, at the same time the borrower pays his or her asset loan payment, and from which the lender makes tax and insurance payments applicable to the borrower.

Escrow Analysis: Annual review of escrow accounts to determine if current monthly deposits continue to provide the required funds to pay taxes, insurance or other payments as they come due.

ESTIMATED THIRD PARTY SETTLEMENTS: Projected amount due, or from third parties, for advances, under or overpayments.

ESTMATED REVENUE OVER EXPENSES: Operating and other healthcare entity income similar to net income before taxes.

ESTIMATED RESIDUAL VALUE: The cash, residual or salvage value of an asset at the end of its useful life.

ESTIMATED USEFUL LIFE: The length of service expected from an asset.

EURO: Common currency conversion of the first eleven nations of the European Central Bank (ECB) in Brussels, founded on January 1, 1999.

EURO BONDS: US denominated debt issued abroad.

European option: An option that can be exercised only on the expiration date.

EUROPEAN STYLE EXERCISE: Option can only be exercised the day prior to expiration.

EVENT RISK: Chance that debt will be downgraded and interest rate costs will rise due to some unexpected negative economic, political, social, business or financial event.

EXCESS CAPACITY: The difference between healthcare outputs corresponding to the minimum possible average cost, and the output produced by a similar monopolistically competitive business entity, in the long run.

EXCESS EARNINGS: Future estimated economic benefit from a healthcare concern over the rate of return for a similar business enterprise.

EXCESS EARNINGS METHOD: Healthcare entity valuation based on the sum value of assets from capitalized earnings excess, and the value of selected assets.

EXCHANGE: Any organization that maintains a marketplace for the purchase or sale of securities.

EXCHANGE LISTED SECURITY: A security listed on an exchange for sale or purchase.

EXCHANGE PRIVILEGE: The right to exchange the shares of one open-end fund, or class of fund, for those of another under the same sponsorship, at nominal cost or at a reduced sales charge. For tax purposes, such an exchange is considered a sale and new purchase

EXCHANGE RATE: The price of a foreign currency relative to another currency.

EXCHANGE RISK: Foreign currency uncertainty regarding value.

EXEMPTED SECURITY: A security exempt from the registration provisions of the Securities Exchange Act of 1933. Among exempt securities would be Government and municipal bonds, private placements and intra-state issues.

EXEMPT TRANSACTION: Any securities transaction that does not trigger state registration and/or advertising requirements under the Uniform Securities Act (USA).

EXCHANGE TRADED FUNDS (ETFs): A securities index traded like stocks, first on the American Stock Exchange (AMEX), and now on other exchanges.

EXECUTION: Signing, delivering or carrying out a contract or transaction.

EXERCISE: To place into effect the option rights held by an option buyer. To request the writer to deliver stock at the stated price (call) or to pay the stated price for stock delivered to him (put).  To invoke the rights granted to the holder of an option contract. In the case of a call, the option holder buys the underlying stock from the option writer. In the case of a put, the option holder sells the underlying stock to the option writer.

EXERCISE NOTICE: An irrevocable written statement, tendered by a clearing member in whose account with the Options Clearing Corporation (OCC) an option is held, that states an option holder’s intention to exercise the option.

EXERCISE PRICE: The price at which the holder of an option may purchase (in the case of a call option) or sell (in the case of a put option) the indicated underlying security. Also called the strike price.

EXPANSION: A period of rising or increased business and economic activity.

EXPENDITURE: Monetary disbursement for goods, services, assets other economic inputs, usually expected to be used in the short-term.

EXPENSE: The decrease in stockholder or owner’s equity from using assets or increasing liabilities in the course of delivering healthcare goods or services.

EXPENSE RATIO: Percentage of mutual fund efficiency calculated by dividing expenses by net assets.

Expiration date: The date on which an option and the right to exercise cease to exist.

EXPIRATION MONTH: The month in which an option ceases to exist.

Ex-dividend: Occurs when dividends are declared by a company’s board of directors, they are payable on a certain date (“payable date”) to shareholders recorded on the company’s books as of a stated earlier date (“record date”). Purchasers of the stock on or after the record date are not entitled to receive the recently declared dividend, so the ex-dividend date is the number of days it takes to settle a trade before the record date (currently three business days). A stock’s price on its ex-dividend date appears in the newspaper with an X beside it.

EX-DIVIDEND DATE: A date set on which a given stock will begin trading in the marketplace without the value of a pending dividend included in the contract price. It is normally 2 business days before the record date, except on mutual funds.

ex-gratia payment: Settlement of a claim even though a company does not feel it is legally obligated to pay. Settlement is made in order to prevent an even larger expense to the company as a result of having to defend itself in court, or for goodwill purposes.

EX-LEGAL: A term that refers to the absence of a legal opinion. An “ex-legal” delivery is a delivery of municipal securities in the secondary market without a copy of the legal opinion being provided.

EX-RIGHTS: A term applied to stocks trading in the marketplace for which the value of the subscription privilege has already been deducted and which, therefore, no longer bears such a right; it is literally trading “rights off”.

EX-WARRANTS: Stocks sold without warrant attached.

EXPANSION: A period of rising outputs.

EXPECTED EXPENSES: Expected health insurance related costs, exclusive or managed care claims related costs.

EXPECTED EXPENSE RATIO: Ratio of expected incurred health or disability insurance costs, and written premiums received.

EXPECTED RETURN: the sum total of anticipated return: capital gains, plus dividends, plus interest.

Expected Source of HEALTHCARE Payment: These payer categories are used to indicate the type of entity or organization expected to pay or did pay the greatest share of the patient’s bill:

  • Medicare – A federally administered third party reimbursement program authorized by Title XVIII of the Social Security Act. Includes crossovers to secondary payers.
  • Medi-Cal – A state administered third party reimbursement program authorized by Title XIX of the Social Security Act.
  • Private Coverage – Payment covered by private, nonprofit, or commercial health plans, whether insurance or other coverage, or organizations. Included are payments by local or organized charities, such as the Cerebral Palsy Foundation, Easter Seals, March of Dimes, Shriners.
  • Workers’ Compensation – Payment from workers’ compensation insurance, government or privately sponsored.
  • County Indigent Programs – Patients covered under Welfare and Institutions Code Section 17000. Includes programs funded in whole or in part by County Medical Services Program (CMSP), California Health Care for Indigent Program (CHIP), and/or Realignment Funds whether or not a bill is rendered.
  • Other Government – Any form of payment from American government agencies, whether local, state, federal, or foreign, except those included in the Medicare, Medi-Cal, Workers’ Compensation, or County Indigent Programs categories listed above. Includes California Children Services (CCS), the Civilian Health and Medical Program of the Uniformed Services (TRICARE), and the Veterans Administration.
  • Other Indigent – Patients receiving care pursuant to Hill-Burton obligations or who meet the standards for charity care pursuant to the hospital’s established charity care policy. Includes indigent patients, except those described in the County Indigent Programs above.
  • Self-Pay – Payment directly by the patient, personal guarantor, relatives, or friends. The greatest share of a patient’s bill is not paid by insurance or health plan.
  • Other Payer – Any third party payment not included in the above categories. Included are cases where no payment will be required by the facility, such as special research or courtesy patients.

EXPENDITURE: The issuance of checks, disbursement of cash, or electronic transfer of funds made to liquidate an expense regardless of the fiscal year the medical service was provided or the expense was incurred. When used in the discussion of the Medicaid program, expenditures refer to funds spent as reported by the States.

expenditure, capital: The amount of money paid for a fixed asset.

EXPENSE: Funds actually spent or incurred providing goods, rendering medical services, or carrying out other health mission related activities during a period. Expenses are computed using accrual accounting techniques that recognize costs when incurred and revenues when earned and include the effect of accounts receivables and accounts payable on determining annual income. The overhead cost involved in running the business, aside from losses of claims.

expense allowance: Compensation or reimbursement in excess of prescribed salary or commissions for overhead, etc. Money paid by an insurer to an agent or agency head for incurred expenses.

EXPENSE BUDGET: The pro-forma budget used to forecast healthcare operational expenses.

EXPENSE COST VARIANCE: The difference between estimated and actual variable expenses.

expense incurred: Expenses paid and expected to-be-paid.

EXPENSE LIABILITIES: Taxes and expenses incurred due to normal business operating activities.

EXPENSE PAID: Money paid out related to normal operating expenses, but not the cost of healthcare claims payments. Money disbursed by the health insurance company for conducting business other than for the purpose of paying claims.

Expense per Day: Total health care expenses of the facility exclusive of ancillary expenses divided by patient days.

Expense per Discharge (Hospital): Adjusted inpatient expenses divided by discharges (excluding nursery).

Expense per Unit of Service: The average cost to the hospital of providing one unit of service.

expense reserve: A fund set aside to pay future expenses. A health-insurance company is responsible for incurred-but-unpaid expenses.

Expense Ratio: The cost of a mutual fund, variable annuity sub-account, or portfolio, to conduct business as a percent of its assets. Expense ratios are found in prospectuses.

EXPENSE RISK: The liability of a managed-care or health insurance company for higher costs than charged for in the policy premiums.

EXPENSE VOLUME VARIANCE: The total high or low variance from actual volume compared with budgeted or forecasted volume.

EXPIRATION DATE: The date which an option contract must be exercised.

Explanation of Benefits (EOB): A statement of coverage that lists any health services that have been provided as well as the amount billed and payment made by the health plan for those services.

EXPOSURE: Extent of assumed risk.

EXTENDIBLE SECURITY: Debt or bond whose maturity date may extend well into the future.

EXTENSION: An informal method of reorganization where creditors voluntarily postpone payment on past due invoices and obligations.

EXTERNAL DISECONOMY: The uncompensated cost from a patient or healthcare entity resulting from the consumption or output of another patient or entity.

EXTERNAL ECONOMY: The uncompensated benefit from a patient or healthcare entity resulting from the consumption or output of another patient or entity.

EXTERNAL FUNDS: Money brought in from outside a company; usually in the form of debt.

Externalities: Effects of a program that impose costs on persons or groups who are not targets. The cost or benefits of healthcare market transactions that are not reflected n the prices buyers and sellers use to make their decisions.

EXTRA DIVIDEND: A dividend in addition to a regular recurring dividend.

EXTRAORDINARY ITEM: An irregular, rare or infrequent revenue or expense occurrence.


FACE-AMOUNT CERTIFICATE COMPANY (FAC): An investment company that issues a debt instrument obligation itself to pay a Stated sum of money (face amount) on a date fixed more than twenty-four months after issuance, usually in return for deposits made by an investor in periodic installments.

FACE VALUE: The redemption value of a bond or preferred stock and sometimes referred to as par value.

FACILITY CHARGE: Service fee submitted for payment by a healthcare facility, such as a clinic, hospital or ambulatory care center.

FACTORING: The sale of medical accounts receivable at a discount.

FAIL: Transaction between two securities brokers or dealers on which delivery does not take place on the settlement date. A transaction in which a dealer has yet to deliver securities is referred to as a “fail to deliver”; a transaction in which a dealer has not yet received securities is referred to as a “fail to receive”.

FAIR CREDT BILLING LAW: The law that protects the rights of people who receive erroneous bills from creditors.

Fair Credit Reporting Act (FCRA): A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one’s credit record.

FAIR CREDIT REPORTING LAW: The right to review credit history and have errors corrected.

FAIR DEBT collection PRACTICE: Protection from unfair or deceptive debt collection practices.

FAIL TO DELIVER / RECEIVE: Failure of a sell side broker-dealer to deliver securities, or the failure of a buy side broker-dealer to receive securities.

fair market value (FMV): A legal term variously interpreted by the courts, but generally meaning the price at which a willing buyer will buy and a willing seller will sell an asset, in an open free market with full disclosure.

fair value: Value that is reasonable and consistent with all of the known facts.

FAIRNESS OPINION: Opinion whether the monetary consideration in a healthcare business transaction is fair from an economic and financial perspective.

FALLEN ANGEL: The quality deterioration of a former investment grade security.

Family of Funds: Groups of mutual funds managed by the same company. Owning a number of funds within the same family often can make it easier to switch money among funds.

FAVORABLE VARIANCE: When revenues or expenses are higher or lower, than expected.

FEASABILITY STUDY: A report detailing the economic practicality and the need for a proposed capital program. The feasibility study may include estimates of revenues that will be generated and details of the physical, operating, economic, or engineering aspects of the proposed project.

Federal Deposit Insurance Corporation (FDIC): An agency of the United States government that insures deposits up to $100,000 in federally and state-chartered banks.  The insurance is financed by a fee paid by the insured institutions. The FDIC promotes the safety and soundness of insured depository institutions and the U.S. financial system by identifying, monitoring and addressing risks to the deposit insurance funds. The FDIC also is the primary federal regulator of about 6,000 state-chartered “nonmember” banks (commercial and savings banks that are not members of the Federal Reserve System).

Federal Depository Insurance: A program of the Federal Deposit Insurance Corporation that insures depositors in federally and state-chartered banks.

FEDERAL FUNDS: Immediately available funds representing non-interest-bearing deposits at Federal Reserve banks. Federal funds are actively traded among commercial bank members of the Federal Reserve System. Federal funds are the primary payment mode for government securities and are often used to pay for new issues of municipal securities and for secondary market transactions in certain types of securities.

FEDERAL FUNDS RATE: The interest rate ob federal funds. 

Federal Insurance Contributions Act (FICA): The Social Security tax that employers and employees pay, based on the employee’s gross salary. The current FICA tax rate is 7.65% each, for employer and employee.

FEDERAL OPEN MARKET COMMITTEE (FOMC): Group that sends instructions to the Federal Reserve Bank of New York to sell or buy government securities on the open market.

FEDERAL RESERVE: The US central bank.

FEDERALLY QUALIFIED HMO: HMO that meets the standards of the Federal Health Maintenance Organization Act (FHMOA). 

FEE: A charge or price for professional services, such as medical care.

FEE ALLOWANCE: A fee schedule for medical or healthcare services rendered.

Fee Disclosure: Physicians discussing charges prior to medical treatment.

Fee-For-Service: (a) Method of reimbursement based on payment for medical services rendered by practitioners. The payment may be by an insurance company, patient or government program, such as Medicare or Medicaid. (b) Refers to payment in specific amounts for specific services rendered–as opposed to retainer, salary, or other contract arrangements. In relation to the patient, it refers to payment in specific amounts for specific services received, in contrast to the advance payment of an insurance premium or membership fee for coverage, through which the services or payment to the supplier are provided. See Prospective Payment System.

Fee Schedule: A listing of accepted fees or established allowances for specified medical procedures. As used in medical care plans, it usually represents the maximum amounts the program will pay for the specified procedures.

Fee Schedule Payment Area: A geographic area where payment for a given service under the Medicare Fee Schedule does not vary.

FHA PROGRAM: Mortgage insurance from the Federal Housing Administration, for principle and interest on a loan for a medical professional.idelity bond.

Fiduciary: Relating to, or founded upon, a trust or confidence. A fiduciary relationship exists where an individual or organization has an explicit or implicit obligation to act in behalf of another person or organization’s interests in matters which affect the other person or organization. This fiduciary is also obligated to act in the other person’s best interest with total disregard for any interests of the fiduciary. Traditionally, it was generally believed that a physician had a fiduciary relationship with patients. This is being questioned in the era of managed care as the public becomes aware of the other influences that are effecting physician decisions. Doctors are provided incentives by managed care companies to provide less care, by pharmaceutical companies to order certain drugs and by hospitals to refer to their hospitals. With the pervasive monetary incentives influencing doctor decisions, consumer advocates are concerned because the patient no longer has an unencumbered fiduciary.

fiduciary bond: A bond that guarantees the faithful performance in life and health insurance matters.

FIELD WAREHOUSE: Inventory financing method where a “warehouse” is located at the healthcare facility.

FILING: Registration of securities.

FILING DATE: Date of new securities registration by an issuing company.

FILING EXTENSION: The additional time period to file an income tax return.

FILL: To execute an order on a securities transaction.

FILL-OR-KILL (FOK) ORDER: An order that requires immediate purchase or sale of a specified amount of stock. If the order cannot be filled immediately, it is automatically canceled (killed).

FINAL PROSPECTUS: Legal document which includes material information about a new securities registration, such as price, delivery date, and underwriter’s spread.

FINAL PRODUCTS: Healthcare goods or services sold to the end user patient, and not to be used as other healthcare goods or services to be resold.

FINANCIAL ACOUNTING: Accounting the focuses on information outside the healthcare or other entity.

FINANCIAL ACCOUNTING STANDARDS BOARD (FASB): The private organization that determines how domestic accounting is practiced.

FINANCIAL ADVISOR: With respect to a new issue of municipal securities, a consultant who advises the issuer on matters pertinent to the issue, such as structure, timing, marketing, fairness of pricing, terms and bond ratings. A financial adviser may also be employed to provide advice on subjects unrelated to a new issue of municipal securities, such as advising on cash flow and investment matters. The financial adviser is sometimes referred to as a “fiscal “consultant” or “fiscal agent” MSRB Rule G-23 provides that a firm or bank which has acted in a financial advisory capacity with respect to a new issue of municipal securities (pursuant to a written contract) may underwrite the new issue (a) on a negotiated basis after making certain disclosures, obtaining the consent of the issuer and terminating the financial advisory relationship; or, (b) on a competitive basis if the issuer gives written consent before the financial adviser’s bid is submitted.

FINANCIAL ANALYSIS: The study of financial statements.

FINANCIAL ASSETS: Economic asset that is not fixed.

FINANCIAL BUDGET: Projected cash outflows and inflows, with a period-ending balance sheet and statement of cash flows.

FINANCIAL FUTURES: A contract for the delivery of a financial asset into the future.

FINANCIAL INTERMEDIARY: Person or entity that operates a financial channel between two parties; such as an HMO or health insurance company.

FINANCIAL LEVERAGE: Ratio of total debt to assets.

FINANCIAL INTERMEDIARY: A third party that borrows from one group in order to lend to another.

FINANCIAL MARKET: A place of financial, capital and exchange.

FINANCIAL POSITION: Balance sheet or related information.

FINANCIAL RATIOS: Percentages taken from various consolidate financial statements, such as: liquidity, operating, debt and profitability ratios.

FINANCIAL RISK: The risk associated with a healthcare or other entities’ source if financing and funding.

FINANCIAL SERVICES MODERNIZATION ACT (gRAMM-lECH-bLILEY): Act of 1999 that eliminated the distinction between banks, insurance companies and securities firms. It repealed portions of the Bank Holding Company Act (BHCA) of 1956, and the Glass-Steagall Act (GSA) of 1933.

FINANCIAL STATEMENTS: The written accounting records of company status: Balance Sheet; Income Statement, Cash Flow Statement and Statement of Changes in Operating Conditions.

FINANCIAL SRUCTURE: The right side of a balance sheet indicating the manner in which a healthcare firm is financed.

FINANCIAL STATEMENTS: Business accounting documents that report on monetary amounts from a healthcare entity.

FINANCIAL VIABILITY: The survivability of a healthcare or other business enterprise.

Finance: The study, sources, timing, and channels of public health funds, and the authority to raise and distribute those funds.

finance committee: Committee of the board of directors for managed care whose duty it is to review financial results, approve budgets, set and approve spending authorities, review the annual audit, and review and approve outside funding sources.

FINANCIAL DATA: Data regarding the financial status of managed care entities.

FINANCIAL GUARANTY INSURANCE COMPANY: A wholly owned subsidiary of FGIC Corporation which offers non-cancelable insurance guarantying the full and timely payment of principal and interest due on securities on stated maturity, mandatory sinking fund, and interest payment dates. FGIC writes insurance on (I) new issue tax-exempt securities that may be insured partially or entirely, and (2) unit investment trusts. In the case of unit investment trusts, individual issues may be insured for their entire life or until an issue is sold out of the trust. Bonds insured by FGIC are currently rated AAA by Standard & Poor’s and Aaa by Moody’s Investors Service, Inc.

FINANCIAL LEVERAGE: Asset purchase with borrowed funds.

FINANCIAL RATIOS: Financial ratios, with ratio analysis, are the calculation and comparison of mathematic ratios derived from the information in a managed care company’s financial statements. The level and historical trends of these ratios can be used to make inferences about a company’s financial condition, premiums and payouts, its operations and attractiveness as an investment or insurance policy.

FINANCIAL RISK: The degree of uncertainty of future cash flow from a healthcare business entity due to financial leverage or debt.

FINANCING ACTIVITIES: Financing activities, like borrowing or paying-back loans, as seen on a Statement of Cash Flows.

FINANCING MIX: The methods by which a healthcare organization provides for its daily working-capital and operating needs.

FIREWALL: Financial metaphor for the legal separation between certain economic activities (underwriting versus R&D).

FIRM: A healthcare organization that produces medical goods or services for sale in an attempt to make a profit.

FIRM COMMITMENT: Underwriting where the underwriter buys the entire issue from the issuer at an agreed upon price and then proceeds to sell the issue. The issuer has a firm commitment because the entire issue is sold to the underwriter.

FIRM MARKET: In the OTC market, a quotation on a given security rendered by a market-maker at which he stands ready and able to trade immediately for 100 shares (a round lot) unless otherwise specified

FIRM ORDER: A brokerage order confirmed and not subject to cancellation.

FIRM PRICE: A designation that a quotation (a bid or an offering price) will not be changed for a specified period of time and will be the price of any transaction executed with the party to whom the quotation is given during that period. The dealer giving a firm quotation also commits itself, not to effect a transaction in the securities with any other party during that period. For example, a dealer may give another dealer an offering price on specified securities that is “firm for one hour”; if the second dealer wishes to purchase those securities at that price, it would contact the first dealer during that time period and execute the transaction. Firm quotations may sometimes be subject to a “recall”, either immediately upon notice or after a specified period. For example, a dealer may give another dealer an offering price that is “firm for one hour with a five-minute recall”. In this case, the quoting dealer has the right to contact the second dealer and inform it that the offering price will no longer be valid if the second dealer does not execute a transaction against the price within five minutes.

FIRM QUOTE: Market-maker round-lot bid or offer securities price, stated but not identified as a quote.

First Mortgage: A debt, loan or mortgage which is in first lien position, taking priority over all other liens which are financial encumbrances.

FIRST-IN, FIRST-OUT (FIFO): An inventory costing method where the first costs into inventory are the first costs attributed to cost of goods sold. The ending inventory is based on the cost of the most recent purchases.

FISCAL: Pertaining to finances.

FISCAL AGENT: Contracted claims agency that processes Medicaid health insurance claims.

Fiscal Intermediary: The agent (e.g., Blue Cross) that has contracted with providers of service to process claims for reimbursement under health care coverage. In addition to handling financial matters, it may perform other functions such as providing consultative services or serving as a center for communication with providers and making audits of providers’ needs.

FISCAL POLICY: Government policy of raising taxes and spending money.

Fiscal Services: The non-revenue producing costs centers for those services generally associated with the accounting, credit, collection, and admitting operations of a facility.

Fiscal Soundness: The required amount of funds that a managed care organization must keep on reserve due to financial risk, as regulated by the Department of Insurance.

Fiscal Year: A 12-month period for which an organization plans the use of its funds, such as the Federal government’s fiscal year (October 1 to September 30). Fiscal years are referred to by the calendar year in which they end; for example, the Federal fiscal year 2007 began October 1, 2006. Hospitals can designate their own fiscal years, and this is reflected in differences in time periods covered by the Medicare Cost Reports. A 12-month period when a company balances its books. The term is ordinarily used only when the 12-month period is not a regular calendar year.

FITCH INVESTORS SERVICE: An independent service company based in New York City that provides ratings for municipal securities and other financial information to investors.

FIVE HUNDRED DOLLAR RULe: SEC Regulation T exemption provision for margin account deficiencies of less than five hundred dollars.

FIXED ANNUITY: Guaranteed insurance investment contract for a given period, at a given rate of return.

FIXED ASSETS: Non-movable healthcare entity assets.

FIXED ASSET TURNOVER RATIO (FATR): Ratio of dollars generated for each dollar reinvested in a healthcare organization’s plant and equipment.

FIXED BUDGET: A financial plan in which specifically allocated amounts do not vary with level of activity or volume; static budget.

FIXED CHARGE-COVERAGE RATIO (FCCR): EBIT plus lease payments / interest + lease payments + (debt payments / 1-tax rate).

Fixed Costs: Costs that do not change with fluctuations in census, utilization of services or when a healthcare entity various its’ output.

FIXED INCOME SECURITY: A preferred stock or a debt security with a stated percentage or dollar income return.

FIXED INCOME SECURITY: A preferred stock or a debt security with a stated percentage or dollar income return.

FIXED INPUT: A healthcare or other input whose quantity does not change over the short term.

FIXED INTEREST RATE DEBT: The unchangeable interest rate on the life of a debt based security.

FIXED LABOR BUDGET: A series of income and outflow projections for human labor costs.

FIXED SUPPLIES BUDGET: An expense budget of fixed supply costs that does not vary as a result of the amount of services provided by a healthcare or other business entity.

FLAT: A transaction involving bonds (most income bonds and all obligations for which interest is not currently being paid) in which accrued interest is not added to the contract price.

Flat Fee-Per-Case: Flat fee paid for a client’s treatment based on their diagnosis and/or presenting problem. For this fee the provider covers all of the services the client requires for a specific period of time. Often characterizes “second generation” managed care systems. After a MCO squeezes out costs by discounting fees, they often come to this method. If provider is still standing after discount blitz, this approach can be good for provider and clients, since it permits a lot of flexibility for provider in meeting client needs.

FLAT FEE SYSTEM: Flat fee paid for a medical treatment based on diagnosis for a specific period of time.

FLAT MARKET: Stable market malaise characterized by little price movement, low volume and little activity.

FLEXIBLE BUDGET: An estimate of revenues and expenses over time and a range of healthcare services.

FLEXIBLE BUDGET VARIANCE: The difference between what a healthcare entity actually spent at the actual level of output, and what it should have spent to obtain the actual level of output.

FLEXIBLE EXPENSES: Costs and expenditures that can be adjusted reduced or eliminated.

Flexible Premium Annuity: An annuity that permits additional premium payments into the contract after the original purchase.

FLIGHT TO QUALITY: Capital movements to low risk and safe-havens in time of economic stress.

FLIP: The purchase of stock shares, especially in an IPO, and immediately selling them for profit.

FLOAT: Time delay in the billing and collect cycle.

FLOATER: A colloquial term for a security with a floating or variable interest rate.

FLOATING RATE or VARIABLE RATE: An interest rate on a security that changes at intervals according to an index or a formula or other standard of measurement as stated in the bond contract. One common method is to calculate the interest rate as a percentage of the rate paid on selected issues of Treasury securities on specified dates.

Floating rate notes: These are bonds with a coupon that floats and is therefore adjusted periodically, weekly, monthly, quarterly, or semi-annually. The rate is calculated using an agreed-upon formula in the indenture, generally a spread over treasury bills. Some floating rate bonds have floors and ceilings, both of which protect the investor’s coupon income in a declining rate environment and also limit his or her coupon return when rates increase.

Floor: Term that refers to the amount certain deductible expenses must exceed to generate tax savings. For example, medical expenses are deductible, but only to the extent they exceed 7½% of AGI (floor) do they result in tax savings.

FLOW OF FUNDS: The order and priority of handling, depositing, and disbursing pledged revenues, as set forth in a hospital revenue bond contract. Generally, the revenues are deposited, as received, into a general collection account or revenue fund for disbursement into the other accounts established by the bond contract. Such other accounts generally provide for payment of the costs of debt service, operation and maintenance costs, debt service reserve deposits, redemption, renewal and replacement and other requirements.

FLOWER BONDS: US Bond, accepted at par value at the time of death, for estate tax purposes.

FLURY: Sudden and unexpected increase in securities trading activity.

FOB DESTINATION: Free-on-Board until the destination.

FOB SHIPPING: Free-on-Board for shipping costs.

FORECASTING: Predicting future economic and financial trends based on current data and other estimations.

FORFEITURE: The loss of assets or rights due to the failure of contracted terms and conditions.

FOREIGN EXCHANGE MARKET: An overseas market for the purchase or sale of currencies.

FORGONE BENEFIT: A cost accounting value not achieved because of a different course of action.

FORM 3: SEC required form for all holders of 10% or more of a company stock, and by all directors and officers.

FORM 4: SEC required form for holding changes for all stock-holders of 10% or more of a company stock, and by all directors and officers, even if no change has taken place.

FORM 8-K: SEC required form for material financial events of public companies.

Form 1040: The general tax form used by individual taxpayers.

Form 1065:  The general tax form used by partnerships to report profits and losses.

Form 1120S:  The general tax form used by S Corporations to report profits and losses.

Form 2106:  The general tax form used by individual taxpayers to report miscellaneous itemized deductions (e.g., hospital employee business expenses).

Form 4562:  The general tax form used to report depreciation and to compute and report the Internal Revenue Code Section 179 expense election.

FORM T: National Association of Securities Dealers (NASD) required form for reporting equity transactions executed after normal market hours.

Form W-2:  The year-end summary of wages/salaries and taxes withheld, provided by the employer to the employee for completion of the employee’s income tax return for submission to the Internal Revenue Service.

Form 10-K and Form 10-Q: Annual and quarterly reports, respectively, required by the Securities and Exchange Commission (SEC) of every issuer of a registered security, including all companies listed on the exchanges and those with 500 or more shareholders or more than $1 million in gross assets. Audited financial statements for the fiscal year must include revenues, sales, and pretax operating income, a 5-year history of sales by product line and a sources and uses of funds statement comparative to the prior year. The quarterly report is not required to be as extensive, nor must it be audited, but it should contain a comparison to the same quarter in the prior year. As a matter of public information, these reports are available to the general public and are required to be filed on a timely basis.

FORM 13-D: SEC required form for non-control equity positions acquired in the ordinary course of business.

FORM 13-G: SEC required short form of Schedule D (non-control equity positions acquired in the ordinary course of business).

FORM LETER: National Association of Securities Dealers (NASD) approved letter for securities sales literature.

FOR-PROFIT: A healthcare or other organization where financial profits, if any, can be distributed outside the company.

FORWARD CONTRACT: Commitment to sell or buy an asset at a certain price and time, in the future.

FORWARD PRICING: A method to determine the purchase or redemption price after receipt of a mutual fund or variable annuity order from a customer. All bid and asked prices are based on the next computed net asset value after receipt of the order.

FOURTH MARKET: Direct institutional trading without the use of an intermediary or brokerage firm.

FRACTIONAL SHARE: A portion of a whole share of stock.

Fraud: A deception that could result in paying for medical services it shouldn’t. For example, if a provider files a claim for a service that wasn’t provided.

FRAUD ALERT: Warning from the Office of the Inspector General (OIG) to medical providers that warns of fraud and abuse law violations.

FRAUD AND ABUSE: Federal and state, Medicare and Medicaid, violations of the Internal Revenue Code, Stark I and II laws, or other codes that proscribe patient referrals to entities in which a family member have a financial interest. Abuse is unneeded, harmful, or poor-quality healthcare delivery or services.

Free cash flow: Cash flow after clinic or business operating expenses; a good indicator of profit levels.

FREE LOOK: A letter to potential mutual fund investors explaining plan sales charges and fees, and allowing them to terminate the plan without cost.

FREE MARKET: The situation that exists when there are no restrictions or limits preventing buyers or sellers from entering or exiting a market.

FREE RIDE: One who consumes public goods or services, such as healthcare, without contributing to payments or costs.

FREE-RIDING & WITHOLDING: The failure of a broker/dealer to make a bona-fide public offer of a hot issue also called “withholding”.

FREEZE OUT: Minority shareholders pressure to sell.

FRINGE BENEFIT: Employment benefit beyond salary, cash or wages; health or life insurance; pension plan, vacation, etc.

FRONT-END LOAD: Funds paid at the outset of the direct participation program that does not contribute materially to the actual investment vehicle. Front-end load typically consists of distributions to general partners, organizational fees, or acquisition fees.

FRONT-RUNNING: Form of market manipulation where a broker/dealer delays processing of a large customer trade in an underlying security until the firm can execute an options trade in that security in anticipation of the client’ s trade impact on the underlying security.

FROZEN ACCOUNT: A cash account in which a customer fails to pay for a purchase within the allowable Regulation T period and no extension has been obtained. Prior payment is required before any further purchase executions for ninety days thereafter. Margin accounts are never frozen.

FULL CAPACITY SALES (FCS): Actual sales / % capacity of fixed asset operations.

FULL CAPITATION: The health plan or primary care case manager is paid for providing services to enrollees through a combination of capitation and fee for service reimbursements.

FULL COST: Expense that includes all associated costs; fully allocated cost.

FULL DISCLOSURE LAWS: State or federal laws that mandate public healthcare or other companies to disclosure financial and other information that may affect the value of their securities.

Full Interest Payment: Loan or debt payment option that satisfies the minimum amount and all regular monthly interest due.

Full Principal and Interest Payment: Loan payment option that includes all the interest due and reduces principal.

FULL RISK CAPITATION: The complete acceptance of all fiscal risk by a health care plan, facility or provider for the plans members, in return for greater compensation.

full-time employee (EQUIVALENT) (FTE): Generally, employees of an employer who work for 1,000 or more hours in a 12-month period, as defined for pension plan purposes in the Employees Retirement Income Security Act (ERISA).

FULLY ALLOCATED COSTS: Medical service costs after considering all directed and fair share costs.

fully-funded plan: A health plan under which an insurer or Managed Care Organization bears the financial responsibility of guaranteeing claim payments and paying for all incurred covered benefits and administration costs.

FULLY-LOADED: All marketing, sales and administrative fees of a mutual fund, brokerage account; life, health insurance or managed care contract, including agent commissions.

FULLY-DEPRECIATED: Fixed asset which has lost all depreciation (non-cash) expense deductions that the US tax law allows.

FULLY-REGISTERED: A security that has been registered as to both principal and interest. Such securities are payable only to the owner, or to order of the owner, whose name is noted on records of the issuer or its agent.

FUNCTIONAL COSTS: Operating costs classified by function or purpose.

FUND: Collection of asset assets set-aside for a defined purpose.

FUND ACOUNTING: Non-profit healthcare or governmental accounting method that views an organization as a collection of funds

Funds Availability: The dollar amount or time period represented by checks that have been deposited but have not cleared

FUND BALANCE: Excess of assets over liabilities and fund reserves

FUNDAMENTAL ANALYSIS: This type of analysis uses a quantitative (using numbers) approach to market forecasting based on an analysis of corporate balance sheets and income statements. A corporation’s strengths and weaknesses, as shown by arithmetic formulas and other measurements of economic and industry trends, are used to predict future price movements of its stocks and bonds.

FUNDED-DEBT: Long term debt.

FUNDING: The replacement of short-tem debt with long-term securities.

Funding-Level: Amount of revenue required to finance a medical care program.

Funding-Method: System for employers to pay for a health benefit plan. Most common methods are prospective and/or retrospective premium payment, shared risk arrangement, self-funded, or refunding products.

funding-vehicle: The fully funded account into which the money that an employer and/or employees pay in premiums to an insurer or Managed Care Organization (MCO), and is deposited until the money is paid out.

FUNGIBLE: The ability of a security to change, or be substituted or exchanged.

FUTURE SUM OF AN ANNUITY: The compound value of the sum of an equal number of periodic payments.

FUTURE VALUE (FV): The amount of money that an invested lump sum or series of payments will be worth, at some point in the future.

FUTURE VALUE FACTOR (fvf): A multiplier for an invested lump sum of money or payment stream used to estimate its future value.

FUTURE VALUE ANNUITY: The future worth of an annuity payment stream based on its terms and conditions.

Futures contract: A contract calling for the delivery of a specific quantity of a physical good or a financial instrument (or the cash value) at some specific date in the future. There are exchange-traded futures contracts with standardized terms, and there are over-the-counter futures contracts with negotiated terms.

FUTURES MARKET: A stock exchange where futures options and contract are traded.


G-8 FINANCE MINISTERS: Ministers of Finance for the eight largest industrial countries in the world.

GAIN/LOSS: Difference between the amounts of money received when selling an asset, and its books value, or, the difference between sale and purchase price of a security.

GAP OPENING: Opening stock price significantly different (higher or lower) than the previous day.

GARNISHMENT: Creditor access to a debtor’s wages in order to satisfy a debt or overdue account.

GENERAL ACCOUNT: The term describing the account into which premium revenues received by an insurance company are deposited. These funds are usually invested in high quality and safe securities issues.

GENERAL AND ADMINISRATIVE EXPENSES: Healthcare or other entities’ operating expenses not found in the supply and labor budgets.

GENERAL ACCOUNT: A stock-broker, or brokerage firm’s customer’s margin or credit account.

GENERAL FUND: Liabilities and assets of a non-profit healthcare organization that are not set-aside for a specified purpose.

GENERAL JOURNAL: The journal used to record all transactions that do not fit into a special journal.

GENERAL LEDGER: Ledger of accounts reported in financial statements.

GENERAL OBLIGATION BOND: A bond that is secured by the full faith and credit of an issuer with taxing power. General obligation bonds issued by local units of government are typically secured by a pledge of the issuer’s ad-valorem taxing power; general obligation bonds issued by states are generally based upon appropriations made by the state legislature for the purposes specified. Ad-valorem taxes necessary to pay debt service on general obligation bonds are often not subject the constitutional property tax millage limits. Such bonds constitute debts of the issuer and normally require approval by election prior to issuance. In the event of default, the holders of general obligation bonds have the right to compel a tax levy or legislative appropriation, by mandamus or injunction, in order to satisfy the issuer’s obligation on the defaulted bonds.

General partner: An investor and a partner for the purposes of profits, losses and the liabilities of the partnership.  A general partner materially participates in the day-to-day management of the partnership and is jointly and severally liable for the actions and debts of the partnership.

GENERAL SECURITIES REPRESENTATIVE EXAMINATION: The Series seven (7) securities licensing examination.

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (gaap): Accounting guidelines formulated by the Financial Accounting Standards Board (FASB) which govern how accountants measure, process, communicate and record financial information.

GEOGRAPHIC ADJUSTMENT FACTOR (gaf): Third party factor to neutralize geographic financial differences in healthcare provider costs and resources price (i.e., Medicare).

Geometric mean: The Nth root of the product of “n” numbers.

GHOST: One who works with two or more market-makers to manipulate stock prices; unethical behavior.

GILT EDGE SECURITY: A well known legacy company with a rock solid history of dividend payments and bond performance. Analogous to a “blue chip” stock in the equities market.

GLAMOR STOCK: Equities with wide public exposure, owned by institutions, and followed by many stock analysts with high growth rate potential.

GLASS-STEAGALL ACT OF 1933: Federal law that separated commercial banks, investment banks and insurance companies.

Global budgeting: Limits placed on categories of health spending. A method of hospital cost containment in which participating hospitals must share a prospectively set budget. Method for allocating funds among hospitals may vary but the key is that the participating hospitals agree to an aggregate cap on revenues that they will receive each year. Global budgeting may also be mandated under a universal health insurance system. See Budget.

GLOBAL CAPITATION: Providers paid a single per-member-per-month rate to cover all healthcare (professional, facilities and technical) services for a population of people (patients).

GLOBAL CASE RATES: Providers paid a lump sum upon referral to cover all healthcare care (professionals, facilities and technical) services, specific to a defined illness episode.

Global fee: A total charge for a specific set of services, such as obstetrical services that encompass prenatal, delivery and post-natal care. Managed care organizations will often seek contracts with hospitals that contain set global fees for certain sets of services. Outliers and carve-outs will be those services not included in the global negotiated rates.

GLOBAL FUND: A mutual fund (open or closed) whose holdings include outside the USA.

GNP DEFLATOR: The ratio of real to nominal GNP as an index of average prices used to deflate GNP.

GODFATHER OFFER: Munificent and highly beneficial takeover offer that can not be refused by management.

GOING AHEAD: Stock-broker trading in front (before) of a customer’s orders; unethical practice.

GOING CONCERN: A continuous healthcare or other business-enterprise currently in operations.

GOING CONCERN VALUE:  The value of a continuous healthcare or other business enterprise entity that is expected to continue into the future, and derived from patients, vendors and HMO insurance contracts, a trained and assembled workforce, tangible and intangible assets, degrees, certifications, accreditations, licenses, etc.

GOING LONG: Purchasing and owning securities outright for potential profit.

GOING SHORT: Selling securities otherwise not owned.

GOLDEN HANDCUFFS: A munificent and abundant employment contract that ties an executive to a corporation.

GOLDEN PARACHUTE: Munificent and lavish executive contract with abundant fringe benefits resulting from a job loss.

GOOD DELIVERY: Proper securities delivery by a selling firm to the purchaser’s office of certificates that are negotiable without additional documentation and that are in units acceptable under the Uniform Practice Code (UPC).

GOOD DELIVERY-MUNICIPAL SECURITIES: The presentation by a seller of securities previously sold to a purchaser which are in acceptable form for delivery purposes as define in MSRB Rules G-12(e) (with respect to inter-dealer deliveries) and G-15(c) (with respect to deliveries to customers). The delivery standards specified in those rules cover such matters as the criteria for fundability of securities; denominations; the attachment of legal opinions and other required documents; the presentation of interest payment checks in certain circumstances; and, other similar matters.

Good Faith Estimate: A written estimate of financial closing costs which a lender must provide you within three days of submitting an application.

GOOD FAITH DEPOSIT: A sum of money provided to an issuer of a new issue of municipal securities sold at competitive bid by an underwriter or underwriting syndicate as an assurance of performance on its bid. The good faith deposit is usually in an amount from 1% to 5% of the par value of the issue, and generally is provided in the form of a certified or cashier’s check. The check is returned to the bidder if its bid is not accepted, but the check of the successful bidder is retained until the issue is delivered. In the event the winning bidder fails to pay for the new issue on the delivery date, the check is usually retained as full or partial liquidated damages.

GOODWILL: The value and economic benefit attributed to the good-name in the community, above and beyond the norm for a similar healthcare entity, void of their brand recognition. OR, the excess fee, price or cost of a medical service, healthcare firm or operating unit over the current fair market value of the net assets of the firm, or unit. OR, the ability of a healthcare business entity to generate income in excess of a normal rate on assets due to superior doctors, managerial skills, market position, new product technology, etc. There are two types of goodwill:

  • Business Goodwill is the difference between the book value of assets on the healthcare business’s balance sheet and what the business or practice would sell for; or, as the going-concern value which results from an organized assemblage of revenue-producing assets, such as the propensity of patients, doctors, payers and contractors (and their revenue streams) to return to the business in the future.
  • Personal or Doctor Goodwill results from the charisma, knowledge, skill, and reputation of a specific doctor, owner or manager, and various doctor-associates. Personal Goodwill is generated by the reputation and personal attributes of the doctors that accrue to that individual shareholder. Since these attributes “go to the grave” with that specific doctor or shareholder, and therefore can’t be sold, they have no economic value. Personal-doctor goodwill is not transferable. Even with long transition periods of introduction for a new acquiring doctor-owner, the charisma, skills, reputation and personal attributes of the doctor-seller cannot, by definition, be transferred.

GOOD TIL CANCELED ORDER: A limit securities order that remains valid indefinitely, until executed or canceled by the customer.

Government agency issues: Government agency bonds are used to finance various entities created by the U.S. Congress, such as public hospitals or clinics, and therefore the government has a moral obligation (but is not guaranteed) to pay interest and principal. As noted, while most government agency bonds are composed of pools of mortgages, they also exist for other types of loans. Some common examples are Federal Farm Credit Bank (FFCB), Federal Home Loan Bank (FHLB), Federal National Marketing Association (FNMA), Student Loan Marketing Association (SLMA), Federal Home Loan Mortgage Corporation (FHLMC), and Refinancing Corporation (REFCORP). The minimum size of these bonds is generally $10,000, and multiples of $5,000 is available. Some lesser-known issues can be in smaller minimum sizes. Four major types fall within the general category of federal agency issues:

  • Federal agency discount notes are issued in maturities of less than one year, similar to treasury bills. They trade in increments of $10,000 and because they lack a coupon they are bought and sold on a discount yield basis.
  • Fixed-rate debentures pay interest every six months and return the principal upon maturity at par.
  • Floating-rate notes are issued with varying maturity options and reset features for the coupon.
  • Mortgage-backed issues pay monthly principal and interest. Three agencies issue these instruments: Government National Mortgage Association (Ginnie Mae), the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac). Government agencies also issue zero coupon bonds.

Grace Period: Period of time during which a depositor can withdraw funds from a certificate without being penalized; period of time during which a loan payment may be paid after its due date during which no late charge or other penalty is assessed.

GRADUATED SECURITY: Upgraded securities listing (i.e., from the OTC to the NYSE).

GRAHAM (Benjamin) and DODD (David) INVESTING: Conservative and fundamental investing methodology based on undervalued assets.

GRAMM-LEACH-BLILEY ACT: The Financial Services Modernization Act of 1999 that eliminated the distinction between banks, insurance companies and securities firms.

GRANTS: The funds given to a healthcare or other entity for a special project, and usually for a time period certain, along with various other terms and conditions.

GRAVEYARD MARKET: Bear (depressed) market with substantial investor loss.

GREENMAIL: Premium price paid to a corporate raider through a proxy contest with shareholders.

GRESHAM’S (Sir Thomas) LAW: Economic theory that suggests bad (worn) money drives good (new) currency out of circulation.

GROSS: Data, usually financial, not yet subject to deductions, reductions, discounts or charge-offs, etc.

Gross Charges Per 1,000: An indicator calculated by taking the gross healthcare charges incurred by a specific group for a specific period of time, dividing it by the average number of covered members or lives in that group during the same period, and multiplying the result by 1,000. This is calculated in the aggregate and by modality of treatment, e.g., inpatient, residential, partial hospitalization, and outpatient. A measure used to evaluate utilization management performance.

Gross Costs Per 1,000: An indicator calculated by taking the gross costs incurred for healthcare services received by a specific group for a specific period of time, dividing it by the average number of covered members or lives in that group during the same period, and multiplying the result by 1,000. This is calculated in the aggregate and by modality of treatment, e.g. inpatient, residential, partial hospitalization, and outpatient. A measure used to evaluate utilization management performance. This is the key concept for the provider. What matters is our cost and, in managed care, we must control this indicator and make sure it is below our Collections per 1,000.

Gross Domestic Product (GDP): The total current market value of all goods and services produced domestically during a given period; differs from the Gross National Product (GNP) by excluding net income that residents earn abroad.

gross earning: Total earnings, before deduction of taxes and expenses.

Gross Expense Per Discharge: The average expense incurred by hospitals to provide inpatient care, including room and board, patient care services, and goods sold, from admission to discharge. Gross inpatient expenses, divided by discharges, excluding nursery discharges.

Gross Expense Per Visit: The average expense incurred by a hospital to provide care for one outpatient visit; or gross outpatient expenses divided by outpatient visits.

gross income: Income, from whatever personal or business source derived, before taxes are deducted.

Gross Inpatient Expenses: Operating expenses related to providing inpatient services. Excludes non-operating expenses and income taxes but includes physician professional component expenses. Gross inpatient expenses are determined by allocating total operating expenses using the ratio of gross inpatient revenue to the total gross patient revenue.

Gross Inpatient Revenue: Total inpatient charges at the hospital’s full established rates for services rendered and goods sold, including revenue from daily hospital services, inpatient ambulatory services, and inpatient ancillary services. Also includes charges related to hospital-based physician professional services. Other operating revenue and non-operating revenue are excluded.

GROSS MARGIN: Excess of sales revenues over cost of healthcare products, services or goods sold.

GROSS MARGIN (PROFIT) METHOD: An estimation of inventory, based on a cost of goods sold model: Beginning inventory, plus net purchases = cost of DME goods available for sale. Cost of goods available for sale, minus cost of goods sold = ending inventory.

GROSS NATIONAL PRODUCT: The total current market value of all goods and services produced domestically during a given period; differs from the Gross Domestic Product (GNP) by including net income that residents earn abroad.

Gross Outpatient Expenses: Total operating expenses relating to outpatient healthcare services. Excludes non-operating expenses and income taxes, but includes physician professional component expenses. Gross outpatient expenses are determined by allocating total operating expenses using the ratio of gross outpatient revenue to total gross revenue.

Gross Outpatient Revenue: Total outpatient charges at a hospital’s or clinics established rates for outpatient ambulatory and outpatient ancillary services rendered and goods sold. Also includes charges related to hospital-based physician professional services. Other operating revenue and non-operating revenue are excluded.

Gross Patient Revenue: The total charges at a hospital’s or clinics’ established rates for the provision of patient care services before deductions from revenue are applied. Includes charges related to hospital-based physician professional services. Other operating revenue and non-operating revenue are excluded.

  • Gross Inpatient Revenue – Gross revenue for daily hospital services and inpatient ancillary services before deductions from revenue are applied.
  • Gross Outpatient Revenue – Gross revenue for outpatient ancillary services before deductions from revenue are applied.

Gross Patient Service Revenue: The total charges at a healthcare facility’s established rates for the provision of patient care before deductions from revenue are applied. The total amount of monies a healthcare organization earns, at full retail price, for its medical services.

GROSS PRIVATE DOMESTIC HEALTHCARE INVESTMENT: Investment purchases and private expenditures of healthcare firms, the value of related construction, and the change in inventory during the year.

Gross Revenue Per Day: The average amount charged by a hospital for one day of inpatient care (gross inpatient revenue divided by patient-census days).

Gross Revenue Per Discharge: The average amount charged by a hospital to treat an inpatient from admission to discharge (gross inpatient revenue divided by discharges).

Gross Revenue Per Visit: The average amount charged by a hospital for an outpatient visit (gross outpatient revenue divided by outpatient visits).

GROSS SALES: Sales revenue at total value, without discounts, bad debt or other adjustments.

gross working capital: Same as current assets (CAs).

GROUP NET ORDER: An order submitted to an underwriting syndicate for a new municipal issue that, if allocated, is allocated at the public offering price without deducting the concession or takedown. A group net order benefits all members of the syndicate according to their percentage participation in the account, and consequently is normally accorded the highest priority of all orders received during the order period.

GROUP SALES: Sales of securities by a syndicate manager to institutional purchasers.

GROWTH FUND: A mutual fund whose primary investment objective is long-term growth of capital. It invests principally in common stocks with growth potential.

GROWTH INCOME FUND: A mutual fund whose aim is to provide for a degree of both income and long-term growth.

Growth investing: A style of investing that tries to outperform the market by investing in companies that are experiencing growth patterns in earnings, cash flows, sales, capitalization, etc.

GROWTH RATE: The percentage rate at which the economy, securities or some other benchmark are increasing in value.

Growth stock: A stock that has a record of relatively fast earnings growth; usually 1½ to 2 times the average for the market as a whole. If the growth is expected to continue, the stock carries a higher price/earnings multiple than the average for the market.

GTC: Good till Canceled, or an open order for securities purchase.

GUARDIAN: Financial fiduciary or manager of another’s assets, on their behalf.

Guideline companies: Companies that have investment characteristics comparable to those of the company being valued, as in the healthcare sector. Ideal guideline companies are in the same industry as the company being valued; however, if there is insufficient transaction evidence available in the same industry, it may be necessary to select companies with other similarities such as companies serving the same markets, having similar products, growth, and cyclical variability

GUIDELINE PUBLIC COMPANY METHOD: A valuation method for public healthcare or other companies based on the comparable values for business of same or similar enterprise.

GUN JUMPTInG: Securities trading on non-publicly disclosed information; unethical.

GUNSLINGER: An aggressive portfolio manager prone to risk taking in order to achieve higher investment returns.


HAIRCUT: Slang term for a very steep broker-commission.

HAMMERING THE MARKET: An intense stock market sell-off period.

HANDS-OFF: An investor willing to take a passive roll in the investment process; or one who delegate rolls.

HANDS-ON: An investor un-willing to take a passive roll in the investment process; or one who does not delegate rolls and may be controlling.

HCFA: Health Care Financing Administration (older term; now Centers for Medicare and Medicaid Services).

HCFA-1450 HCFA’s (older term, now CMS) name for the institutional uniform claim form, or UB-92.

HCFA 1500: The Health Care Finance Administration’s (older term, now CMS) standard form for submitting physician service claims to third party (insurance) companies.

HEAD-AND-SHOULDERS: A technical theory founded on the belief that a market trend may be predicted by plotting price fluctuations of securities on graph paper. A “top” indicates a bearish future as prices have topped, while a “bottom” is bullish as the market has bottomed.

HEALTHCARE CLEARINGHOUSE: A public or private entity that does either of the following, including but not limited to, billing services, re-pricing companies, community health management information systems or community health information systems, and “value-added” networks and switches are health care clearinghouses if they perform these functions. 1) Processes or facilitates the processing of information received from another entity in a nonstandard format or containing nonstandard data content into standard data elements or a standard transaction; 2) Receives a standard transaction from another entity and processes or facilitates the processing of information into nonstandard format or nonstandard data content for a receiving entity.

HEALTHCARE ECONOMICS: The study of medical services and its financing, accounting, production, value, distribution, cost and consumption.

HEALTHCARE FINANCING ADMINISTRATION (HCFA): The former agency within the Department of Health and Human Services which administers federal health financing and related regulatory programs, principally the Medicare, Medicaid, and Peer Review Organization. Same as the newer term, Centers for Medicare and Medicaid Services (CMS).

HealthCare Prepayment Plan (HCPP): (1) Plans that receive payment for their reasonable costs of providing Medicare Part B services to Medicare enrollees. (See also Cost Contract and Risk Contract.) (2) A health plan with a Medicare cost contract to provide only Medicare Part B benefits. Some administrative requirements for these plans are less stringent than those of risk contracts or other cost contracts. See Medicare Cost Contract, Medicare Risk Contract.

HEALTH PLAN FLEXIBLE SPENDING ACCOUNT (HPFSA): a fund to which employees contribute pretax money to pay for health insurance premiums and/or un-reimbursed medical costs. Exclusions exist on a use-it, or loose-it, basis.

HEALTH SAvINGS ACCOUNT (hsA): Tax-free accounts that are paired with a variety of high-deductible health insurance plans (traditional, managed care, HMO, PPO, etc) that empower employees and patients to have greater control over their health care and treatment decisions.

HEAVY MARKET: A falling market due to a large supply of offers to sell, rather than to buy, the relevant securities.

HEDGE: A security that has offsetting qualities or the attempt to “hedge” against inflation by the purchase of securities whose values should respond to inflationary developments. Securities having these qualities are “inflation hedges”. Purchase of a call option may be used as a hedge on a short sale.

HEDGE FUND: A mutual fund or investment company that, as a regular policy, “hedges” its market commitments. It does this by holding securities it believes are likely to increase in value and at the same time is “short” other securities it believes are likely to decrease in value. The sole objective is capital appreciation. This type of fund is highly aggressive.

Hedging: Offsetting investment risk by using a security that is expected to move in the opposite direction. Options and short selling are commonly used to hedge stock positions.

HIDDEN LOAD: A stoker-broker’s sales commission not immediately visible (transparent) to an investor.

HIGH: The most value a security achieved in a given period.

HIGH FLYER: Speculative and high priced security that has recently jumped in price.

High-yield bonds: These bonds are issued by U.S. corporations that carry less than investment-grade ratings. They are also referred to as junk bonds. For purposes of high-yield bonds, below investment grade means Ba or lower by Moody’s and BB or lower by Standard & Poor’s. The market for high-yield bonds is large. A high-yield security compensates the bondholder for the added risk by offering a higher coupon than could be obtained from investment-grade corporate bonds. Several types of bonds fall within the high-yield sector, including zero coupons, split coupon, increasing rate, floating rate, pay-in-kind, first mortgage, and equipment trust certificates. These are structured just like other bonds bearing the same name; the only difference is the investment quality of the corporation issuing the debt. Because of the higher coupon, there is a potential for higher total returns to the bondholder. Because of their inherent risk, these bonds are an alternative for more aggressive fixed-income investors. They may also be attractive to equity investors who are willing to assume the risk of the lower investment quality. These investors recognize that as the underlying credit quality of the issuer improves, the value of its bonds should increase as well.

HIGH-YIELD SECURITY: Non-investment grade security, that is offering a high rate of return due to its grave risk.

HIGHLY CONFIDENT LETER: Investment banking letter of intimidation suggesting certainty in the ability to arrange financing (junk bond debt) for a securities deal (usually a hostile takeover) or leverage buy-out (LBO).

HILL-BURTON ACT: 1946 Federal legislation that provides subsidies of indigent and charity medical care, especially in rural areas and related and hospital projects.

HISTORIC COST: FASB rule requiring financial statements to list assets at original or acquisition cost.

HIT: An impending significant business development with a major negative impact on the current market value f related securities.

HOLD: An opinion to neither buy nor sell a particular security.

HOLDER: The (long) owner of a security.

HOLDER OF RECORD: Securities owner listed in the issuing company’s corporate records.

HOLDING COMPANY: A corporation designed to hold the stock of other companies.

HOLDING PERIOD RETURN: Total investment return for a specific time period, divided by investment cost.

HOLDING IN STREET NAME: A securities account, held by a broker-dealer (nominal owner), on behalf of the owner customer (beneficial owner).

Home Equity Line of Credit: A line of credit allowing borrowed funds at the time and in the amount of choice up to a maximum credit limit qualified. Repayment is secured by the hone or business equity. Simple interest (interest-only payments on the outstanding balance) is usually tax-deductible. Often used for improvements, major purchases or expenses, and debt consolidation.

Home Equity Loan: Fixed or adjustable rate loan obtained for a variety of purposes, secured by home equity. Interest paid is usually tax -deductible. Often used for home improvement or freeing-up of equity for investment in other real estate or investments. Recommended by many to replace or substitute for consumer loans whose interest is not tax-deductible, such as auto or boat loans, credit card debt, medical debt, and education.

HOME RUN: A short term, but very large investment gain.

HORIZONTAL ANALYSIS: The percentage change of a line item financial statement value for a given time period.

HORIZONTAL MERGER: Occurs when competing healthcare sellers in the same market combine to form a single large business enterprise.

HOSTILE TAKEOVER: Corporate shareholder transfer (takeover) against the wishes of management and directors, and usually financed by debt, such as junk bonds (low investment grade debt), and as in a Leveraged Buy-Out (LBO) situation.

HOT ISSUE: A security that is expected to trade in the aftermarket at a premium over the public offering price.

HOT STOCK: Stolen illegal stock “ownership.”

HUMAN HEALTHCARE CAPITAL: The skills, conscientious industry and qualifications of cognitive workers like doctors, nurses and medical technicians.

HUNG UP: A large drop in the price of securities to below their purchase value with the potential for real loss

HUNKER DOWN: The attempt to sell a large number of securities, or large block position, by a stock broker (work-hard to make-a-sale).

HURDLE RATE: The cost of capital or interest rate.

Hybrid pension plan: A pension plan that has features of both a defined contribution plan and a defined benefit plan:

  • Money purchase plan: A plan in which an employer agrees to contribute a specified amount to the plan on behalf of each employee. The amount available at any time is determined by the contributions and how well the investments perform.
  • Target benefit plan: A plan in which an employer agrees to contribute a specified amount to the plan. This plan features a formula that sets up a target benefit for each employee. The target benefit plan is meant to be similar to a defined benefit plan, but without the actual guarantee of the final benefit. The final benefit ultimately is determined by how well the investments perform.

HYPERINFLATION: A very high rate of inflation sustained for at least a single year.

Hypothecation agreement: A document giving a stock-broker the right to pledge securities to a bank in order to provide funds for lending (margin-credit) capacity.

I-L Terminology


I-BONDS: Inflation indexed (variable interest rate) US savings bonds.

ILLEGAL DIVIDEND: Corporate stock dividend declared in violation of state law or its charter.

ILLIQUID: A dearth of cash flow to meet current obligations and/or maturing debt.

IMMEDIATE ANNUITY: An insurance contract that begins payouts to the owner (annuitant) immediately.

IMMEDIATE OR CANCEL (IOC) ORDER: An order for securities purchase that requires immediate execution at a specified price of all or part of a specified amount of stock, with the unexecuted portion required to be canceled by the broker.

IMMEDIATE WRITE-OFF: Fixed asset cost recognition in the period acquired.

impaired capital: When health or other insurance company liabilities and claims consume a company’s surplus, the capital is impaired. Suspension of the right to do business normally follows.

IMPAIRED CREDIT: A reduction in the credit rating of a healthcare or other organization that increases the cost of capital.

IMPERFECT COMPETITION: Occurs when more than one seller competes for sales with other sellers of competitive healthcare products or services, each of whom has some price control.

IMPLICIT COST: The cost of non-purchased inputs, imputed at cash value.

Impound Account: An escrow account.

IMPREST SYSTEM: Method to maintain a constant balance petty cash account.

IMPROPER ACCUMULATION: The retained earnings of a healthcare entity done to help stockholders avoid personal income taxation.

IMPUTED INTEREST: Rate or amount of interest considered to have been paid; although not actually paid.

IMPUTED VALUE: Logical or common sense value that is not recorded or determined mathematically.

Inactive Account: Any account that has not had any transactions for an extended period of time.

INCENTIVE FEE: Additional commission to sell a poorly selling financial product or security.

Incentive stock option: A hospital or other employee benefit plan that allows certain employees the right to purchase employer securities at a favorable price once they have increased in value subsequent to date the options were granted. Exercising options under an ISO does not result in current income tax consequences to the employee.

Income: As a working investment with economic substance, real estate provides rental income that will provide investment cash flow if the acquisition and financing are properly structured; accounting difference between revenues and expenses.

INCOME ADJUSTMENT BONDS: In the event of financial difficulty, long-term debt obligations are offered in which the interest will be paid by the corporation only when, as, and if earned.

INCOME APRAOCH: Valuation method that converts future estimated financial and economic benefits into a current single present-value amount.


INCOME BOND: A debt that pays interest only if earned.

INCOME EFFECT: The change in consumption of healthcare products or services, only as a result of variation in the purchasing power of money funds induced by a price change.

INCOME ELASTICTY OF DEMAND: A patient-consumer purchase-sensitivity measurement compared to each one percent change in income.

INCOME FROM OPERATIONS: Accounting difference between revenues and expenses, or the net sales of a healthcare or other entity.

INCOME FROM INVESTMENTS: Unrestricted income, gains and dividends from sales of investments.

INCOME FUND: An investment company (mutual fund) that stresses higher than average current income distributions.

Income in-respect-of-a-decedent: Amounts due and payable to a decedent at his or her death because of some right to income. [IRC §691(c)(2)].

INCOME INVESTMENT COMPANY: An income producing mutual fund (investment) company.

Income Loss from Health Care Operations: Gross patient service revenue plus other operating revenue minus deductions from revenue and total health care expenses.

income statement: One of four major kinds of financial statements used by businesses. It is primarily a flow report that lists a company’s income or revenues and its expenses for a certain period of time in order to summarize a company’s financial operations.

INCOME STOK: Stock purchased for its income and dividend producing ability rather than its growth potential.

INCOME TAX: A local, state or federal surcharge imposed on personal or corporate income.

INCORORATION: State charter that allows a healthcare organization or other business and its owners to operate as a company.

INCREASING COST INDUSTY: A space where the price of at least some inputs increase as a direct result of the expansion of the industry, such as healthcare, due to aging demographics.

INCREASING RATE BOND: Debt whose coupon interest rate rises over time.

INCREMENTAL ANALYSIS: Business decision making tool that focus on adoptable altered items.

INCREMENTAL CASH FLOW: The marginal cash flow differences between projects.

INCREMENTAL COST: Incurred cost if an additional activity is under-taken.

INCREMENTAL COST OF CAPITAL: The average cost of supplemental capital raised in a given year.

Incurred But Not Reported (IBNR): Refers to health claims that reflect services already delivered, but, for whatever reason have not yet been reimbursed, reported or captured as a liability by the insurance company. These are bills “in the pipeline”. This is a crucial concept for proactive providers who are beginning to explore arrangements that put them in the role of adjudicating claims–as the result, perhaps, of operating in a sub-capitated system. Failure to account for these potential claims could lead to some very bad decisions because of liability underestimation. Good administrative operations have fairly sophisticated mathematical models to estimate this amount at any given time.

incurred-claim: A situation where insurance premium payment may be demanded under the provisions of the policy, or all claims with dates of service within a specified period.

Incurred Claims Loss Ratio: Incurred claims divided by premiums. Medical expenses not yet paid by a managed care or health-insurance company.

incurred expenses: Healthcare service or other expenses paid or to be paid.

incurred loss: Managed care or health insurance losses occurring within a fixed period, whether or not adjusted and paid during the same period. Obtained by adding to losses paid during a given year those losses still outstanding at the end-of-the-year less losses outstanding at the beginning of the year.

incurred loss ratio: The ratio, fraction or percentage of losses incurred to premiums earned. Relationship of incurred losses to health insurance premiums, experienced by the insuring entity.

INDEFEASABLE TITLE: Ownership that can not declared void.

INDEMNIFY: To compensate for loss or damages; to make whole again.

INDENTURE: A written agreement between issuer and creditors by which the terms of a debt issue are set forth, such as rate of interest, means of payment, maturity date, terms of prior payment of principal, collateral, priorities of claims, trustee.

INDEX: A stock market indicator, derived in the same way as an average, but from a broader sampling of securities.

Index – A percentage upon which future interest rates for adjustable rate debts are based. Common indexes include the major bank Prime rate, the CMT (Constant Maturity Treasury, usually a 1-year term), COFI (Cost of Funds for the Eleventh District financial institutions), and the MTA or average rate of a one year Government Treasury Security.

INDEX FUND: The duplication of a specific securities index by a mutual fund. Index funds are designed to take advantage of the average long-term growth of the market segment tracked by the index rather than attempting to beat the market. The cost of managing an index fund is usually less than managing other types of funds that require more frequent trading.

Index option: An option whose underlying entity is an index. Generally, index options are cash-settled.

INDEX-MULTIPLIER: The amount specified in the option contract by which the in-the-money difference of the option is multiplied to arrive at the cash settlement upon exercise.

INDEXING: Tying healthcare economics or financial amounts to some benchmark, such as the CPI or PPI.

INDICATED YIELD: Dividend or interest rte as a percentage of the current market price of a security

INDICATION OF INTEREST (IOI): An expression of consideration by an underwriter’s customers for investment in a new security expected to be offered soon, generated from the dissemination of a Red Herring prospectus, not a binding commitment on the customer or the underwriter.

INDIFFERENCE CURVE: An illustration of various healthcare markets, or other baskets of goods or services, that provides patients-consumers with similar utility.

INDIRECT BUSINESS TAX: Surcharges, such as general or excise taxes imposed not directly to a healthcare business entity, but rather on its products, goods and services.

INDIRECT COST: Healthcare cost not traced to specific patient or medical service; the opposite of a direct cost.

INDIRECT LABOR: Human cost difficult to trace to specific products or healthcare services.

INDIRECT MATERIAL: Material costs difficult to trace to a specific finished product, good or service.

INDIRECT METHOD: Operating activities format for the Statement of Cash flows that commence with net income and demonstrates the reconciliation from net income to operating cash flows.

Individual retirement account (IRA): An arrangement that permits individuals to receive income tax deductions for limited amounts that are set aside for retirement savings:

  • Regular deductible/nondeductible IRA: Amounts of IRA contributions that is either deductible or nondeductible for individual income tax purposes. Earnings on these IRAs are tax deferred, meaning that taxes on earnings are paid at the time of withdrawal.
  • Roth IRA: Amounts of contributions to Roth IRAs are nondeductible. Earnings on Roth IRAs are never taxable.
  • Educational IRA: Amounts contributed to Educational IRAs are nondeductible; however, earnings are not taxable if withdrawn to pay qualified educational expenses. Anyone can contribute up to $500 per year to an Educational IRA for a child under age 18, provided the total contributions for a child do not exceed $500 per year. The account must be designated as an Educational IRA from its inception.
  • Conduit IRA: A rollover IRA consisting only of a single qualified plan that may be rolled into another qualified pension plan.
  • Inherited IRA: An IRA of a deceased person.
  • Rollover IRA: An IRA consisting of a qualified plan(s) that has been “rolled over” into it.

INDUCED CONSUMPTION: Annual healthcare purchases that respond to a change in disposable income, currently as seen with lifestyle drug use.

INDUSTRIAL DEVELOPMENT BOND: In general, securities issued by a state, a local government or development agency to finance the construction or purchase of industrial, commercial or manufacturing facilities to be purchased by or leased to a private user. IDBs are backed by the credit of the private user and generally are not considered liabilities of the governmental issuer (although in some jurisdictions they may also be backed by an issuer with taxing power). Hospitals usually float revenue bonds.

INEFFICIENT MARKETS: Securities or commodities that do not reflect the risk-return relationship; allowing for profit or loss.

INEFFICIENT PORTFOLIO: A portfolio that does not maximize the risk-return relationship.

INELASTIC DEMAND: Occurs when the price elasticity of demand for healthcare services is equal to, or greater than zero but less than 1.

INELASTIC SUPPLY: Occurs when the price elasticity of supply for healthcare services is equal to, or greater than zero but less than 1.

INFLATION: A persistent upward movement in the general price level of healthcare goods and services which results in a decline in the purchasing power of money.

Inflation Factor: A premium loading to provide for future increases in medical costs and loss payments resulting from inflation. A loading to provide for future increases resulting from inflation in medical costs and loss payments.

Initial public offering (IPO): A corporation’s first offering of stock to the public (sometimes called “going public”).

INITIAL COVERAGE: The first company following and reporting of a particular security by an analyst(s).

INJUNCTION: A legal prohibition against certain actions.

INNOVATION: The first commercial applicability of a healthcare product, invention, test or new technology, etc.

INPUTS: The land, instruments, vehicles, labor, cognitive resources, etc., that are combined to produce healthcare goods or services.

INSIDE INFORMATION: Privileged information concerning a healthcare or other corporation.

INSIDE MARKET: The inside market is normally the highest bid and the lowest asked prices and is displayed on Level One of NASDAQ.

Insider: Technically, an officer or director of a company or anyone owning 10% of a company’s stock. The broader definition includes anyone with non-public information about a company.

INSIDER TRADING: The act, in violation of SEC Rule 10b-5 and the Insiders Trading Act of 1988, of purchasing or selling securities (or derivative instruments based on those securities) based on information known to the party purchasing or selling the securities in his capacity as an insider (i.e., as an employee of the issuer of the securities) or as a result of information illicitly provided to him by an insider. Extensive case law exists concerning the varieties of acts that may be considered to be insider trading or the circumstances in which a person may be considered to be an insider or to be trading illegally on the basis of inside information.

Insolvent: Refers to a situation in which an entity’s liabilities exceed the fair market value of its assets and/or that condition where the entity is not able to pay debts or service debt when due or on a timely basis.

Insolvency: A legal determination occurring when a managed care plan no longer has the financial reserves or other arrangements to meet its contractual obligations to patients and subcontractors.

insolvency clause:  A reinsurance clause that holds the reinsurer liable for its share of loss assumed under the treaty, even though the primary insurer is insolvent.

INSTALLMENT BASIS: Purchase or sale paid-for fractionally over time.

Installment Debt: A debt or loan that is repaid in successive payments over a period of time.

Insubstantial rights: Right to use donated property that is retained by a donor when the retained rights do not interfere with the donee-charity’s unrestricted use or full ownership of the donated property. [George v. U.S. 11/30/61, DC-MI].

Insured bonds: These bonds are insured privately and guarantee the prompt payment of principal and interest. Generally, insured bonds have an AAA rating by Moody’s.

INTANGIBLE ASSET: A non-physical business asset hat grants certain rights and privileges (copyright, trade names, services marks, brand names, etc) that have business enterprise economic value for owners.

INSTITUTIONAL BROKER: Stock-broker who purchases and sells securities for institutions rather than individual investors.

INSTITUTIONAL SALES: Sales of securities to hospitals, banks, financial institutions, mutual funds, insurance companies or other business organizations (institutional investors) which possess or control considerable assets for large scale investing.

INSTRUMENT: Contractual financial legal document with attached terms and conditions usually purchased as an investment for profit potential.

insurance reserves: The present value of future claims, minus the present value of future premiums. Reserves are balance sheet accounts set up to reflect actual and potential liabilities under outstanding insurance contracts. There are two main types of insurance reserves: premium reserves and loss (or claim) reserves.

INTANGIBLE ASSET: An asset without physical form, such as a patent, trademark, physician goodwill, or copyright.

interest: The rent paid for borrowed money or received for loaned money. Ownership in property or business, etc.

interest accrued: Interest earned but not yet payable.

interest, exact: The interest that is computed on the basis of 365 days of the year.

interest factor: One of three factors taken into consideration by an insurance company when calculating premium rates. This is an estimate of the overall average interest that will be earned by the insurer on invested premium payments.

interest rate: That percentage of a principal sum earned from investment or charged upon a loan.

INTEREST RATE RISK: Interest rate un-certainty.

INTERMEDIARY: A third-party empowered to make financial, investment, business, managerial, economics, personal or similar decisions for others.

INTERMEDIATE PRODUCTS: Healthcare products, DME and/or goods for resale by another company.

INTERMEDIATION: Place of money or assets with a third party.

INTERNAL CONTROLS: The system of process which safeguards assets, and accurate and reliable accounting records.

INTERNAL RATE OF RETURN: Rate at which the net present value of an investment is zero, or the percentage return on investment.

International FundL: A portfolio that buys securities of companies headquartered outside of the U.S.global funds which invest in securities of both U.S. and foreign corporations.

INERNAL AUDIT: A check of managerial financial control processes.

INTERNAL REVENUE CODE (IRC): The legislation that defines tax deductions and liabilities for tax payers of the US.

INTERNALIZATION OF EXTERNALITIES: Occurs when the marginal cost or benefit of a healthcare product or service is adjusted so that market sales results in efficient output.

INTERPOSITIONING: An unethical and unfair practice by a broker/dealer of needlessly employing a third party between the customer and the best available market so that the customer pays more on a purchase or receives less on a sale than he should.

INTERSTATE OFFERING: SEC registered securities offered in states to residents in other than the issuing state.

INTENSITY: A measure of healthcare or other resources used by an organization for operations.

IN-THE-MONEY: An option is said to be in-the-money when it has intrinsic value. A call option is in-the-money if the underlying security’s price is greater than the option’s exercise price. A put option is in-the-money if the underlying security’s price is lower than the option’s exercise price.

IN-THE TANK: A quickly dropping financial market.

INTRADAY: Within the financial markets trading day.

INTRASTATE EXEMPTION: An exemption under the 1933 Act from SEC registration for offerings whose issuer, offers, and purchasers are in one state and meet certain other requirements

INTRINSIC VALUE: A call option is said to have intrinsic value when the market price of the underlying healthcare security is greater than the exercise price. A put option is said to have intrinsic value when the market price of the underlying healthcare security falls below the exercise price, OR, the value of a healthcare business enterprise that that an investor considers real and will become apparent to others reaching the same conclusion.

INVENTORY: The quantity or balance in a physical asset account, such as Durable Medical Equipment (DME).


INVENTORY FINANCING: Loan and debt based financing backed by the value of inventory, goods-in-progress, DME, etc.

INVENTORY PRODUCT COSTS: All GAAP product costs regarded as an asset for eternal finance reporting purposes.

INVENTORY PROFIT: Gross margin difference determined between Last-in, First-out (FIFO) and First-in, First-out (LIFO) basis.

INVENTORY TURNOVER: The speed at which DME or other inventory is sold or dispensed

INVERTED YIELD CURVE: Long-term interest rates that are lower than short-term rates; unusual graphical situation

INVESTED CAPITAL: The amount of equity and debt invested in a healthcare business entity

INVESTING ACTIVITIES: The actions that decrease or increase long term assets available to a healthcare organization.

INVESTMENT: The process of adding to, or replenishing capital stock. The purchase of an asset in anticipation of its rise in value

INVESTMENT ADVISOR: A person in the business of rendering advice or analysis regarding securities for compensation. Persons meeting this definition must register as advisers with the SEC under the Investment Adviser’s Act of 1940. The term does NOT include attorneys and accountants giving advice as an incidental part of their professional practice.

INVESTMENT BANK: A broker/dealer organization that provides a service to industry through counseling, and underwriting of securities

INVESTMENT BANKER: One from a broker/dealer organization that provides a service to industry through counseling, and underwriting of securities.

INVESTMENT CLIMATE: Financial and investing conditions currently in place; economic milieu.

INVESTMENT COMPANY: An institution engaged primarily in the business of investing and trading in securities for others including face amount certificate companies, unit trust companies and management companies, both open-end and closed-end.

INVESTMENT COMPANY ACT OF 1940: Federal statute enacted for the registration and regulation of investment companies Required that companies which invest in securities and interstate commerce, be registered with the SEC.

INVESTMENT COMPANY ACT OF 1970: Amendment to the ICA of 1940 requiring a registered investment company that issues contractual plans, to offer all purchasers withdrawal rights and purchasers of front end loaded plans surrender rights.

INVESTMENT CONTRACT: A court-defined concept where funds are pooled in the expectation of making profits from the efforts of a third party or promoter. An investor in such an offering has bought a security, as regulated by the SEC and the states.

INVESTMENT GRADE: The broad credit designation given bonds that have a high probability of being paid and minor, if any, speculative features. Bonds rated BBB or higher by Standard and Poor’s Corporation or Baa or higher by Moody’s Investors Service, Inc., are deemed by those agencies to be “investment grade”.

Investment Grade Bond: A bond with one of the top four credit ratings (AAA, AA, A, BBB) of independent bond-rating agencies, like Moody’s or Standard & Poor’s.

INVESTMENT INCOME: Gross or total amount of dividends, interest, etc. received from an investment company’s investments before deduction of any expenses. Net -Balance of gross income after payment of operating expenses, including management fees, legal and accounting costs, etc. If at least 98% is distributed to shareholders, tax is only paid on the undistributed income.

Investment interest: Payment for the use of funds used to acquire assets that produce investment income.

INVESTMENT LETTER: A written agreement between a seller and buyer, in a private placement of securities, stating that the buyer’s intentions are for investment only and that he does not intend to re-offer the securities publicly.

INVESTMENT MANAGER: The organization that is responsible for the management of the investment company, under contract. Its services usually include general administrative activities and advice and recommendations as to the purchase, holding, or sale of portfolio securities.

INVESTMENT TAX CREDIT: A direct tax reduction for plant or equipment investments.

INVESTMENT VALUE AS DEBT: Convertible security valuable appraised as if it were non-convertible debt.

INVESTOR: One giving capital to another with the expectation of financial return.

Investor-Owned: An ownership group that includes health facilities that are partnerships, sole proprietorships, and corporations, or divisions of corporations that issue stock.

INVOICE: A bill or sellers (healthcare provider or entity) request for payment from a purchaser (patient or insurer).

IRREGULAR DIVIDENDS: Non periodic dividend payments in time and/or amount.

ISSUE: Any of a company’s class of securities, or the act of distributing them.

ISSUED AND OUTSTANDING STOCK: That portion of authorized stock distributed among investors by a corporation.

ISSUER: A healthcare or other corporation, municipality, state, trust, or association engaged in the distribution of its securities.

ITEMIZED BILL: A bill or invoice for medical or other goods and services rendered and the charges for each item.

Itemized deductions: Certain personal expenses such as medical expenses; various state, local, and foreign taxes; home mortgage interest; investment interest; charitable contributions; and miscellaneous expenses


JANUARY EFFECT: The historic tendency of smaller stocks to rise in early January each year.

JESEN INDEX: Performance measurement comparing absolute realized investment returns with risk adjusted returns.

JOINT ACCOUNT: An account in which two or more individuals posses control and may transact business.

JOINT COST: Common healthcare or other costs.

JOINT TENNANTS IN COMMON (JTC): Form of joint account ownership where a deceased tenant’s fractional account ownership share is retained by his or her estate.

JOINT TENANTS WITH RIGHT OF SUVIVORSHIP: Form of joint account ownership where a deceased tenant’s fractional account ownership share reverts to the surviving tenant.

JOINT MANAGER (Co-Manager): Any member of the management group {although the term is often used to refer to a member other than the lead manager.

JOURNAL: The chronological accounting record of an organization’s transactions.

JOURNAL ENTRY: Documentation of the chronological accounting record of an organization’s transactions.

JOURNALIZING: The process of documenting the chronological accounting record of an organization’s transactions

JUNIOR SECURITIES: Common stocks and other issues whose claims to assets and earnings are contingent upon the satisfaction of the claims of prior obligations.

JUNK BOND: A speculative security with a rating of BB or lower. Sometimes called a “High Yield” security

JUST-IN-TIME: Scheduling or production system based on scheduling needs.

JUST-IN-TIME COSTING: System that starts with completed output, and then assigns manufacturing or others costs to units or services-sold, and to inventory.

JUSTFIED PRICE: The informed and fair market value of securities.


KAPPA: Volatility measurement and pricing model for financial derivatives.

Keogh (HR-10) plan: An arrangement that permits self-employed individuals and partners of partnerships to receive income tax deductions for amounts they set aside for savings. A tax-deferred trust savings account that allows self-employed individuals or those who own their own incorporated businesses to save for their retirement. Savers place a portion of their income each year in their Keogh account until they reach at least age 59 1/2. Federal income tax on the deposited funds and the interest they earn is deferred until withdrawals are begun, presumably when the saver has retired, and is, therefore, in a lower tax bracket. Employers who establish a Keogh plan for themselves must also make the benefit available to qualified employees.

KEYPERSON DISCOUNT: Reduction in business enterprise ownership value from the actual or real loss of an owner or key person.

KICKBACK: The federal anti-kickback statute makes it a crime to knowingly and willfully offer, pay, solicit or receive any remuneration to induce a person to: (A) refer an individual to a person for the furnishing of any item or service covered under a federal health care program; or (B) to purchase, lease, order, arrange for or recommend any good, facility, service, or item covered under a federal health care program. The term “any remuneration” encompasses – any bribe, or rebate; direct or indirect; overt or covert; cash or in kind; and any ownership interest or compensation interest.

KICKER: A debt offering with the added bonus of equity participation under the given terms and conditions of the loan.

KILLER BEES: Financial and other advisors who assist in preventing a corporate takeover event.

KITING: To drive securities prices higher through financial market manipulations or to take advantage of check cashing float time; unethical.

KNOCKOUT OPTION: The derivative option right but not the obligation to but the underlying position at a given price.

KONDRATIEF, NIKOLAI; WAVE: Russian economist who suggested that financial markets can be very long; up to fifty years in length.


LABOR: The physical and cognitive efforts of human-beings to produce healthcare products, goods, services or other outputs.

LABOR BUDGEt: An expense projection of a healthcare-entities’ fixed, variable and other costs of its labor pool.

LABOR FORCE: Those medical workers employed and unemployed in the healthcare space.

LABOR VALUE: Suggestion that only healthcare laborers can produce something of value in the medical and healthcare marketplace.

LADDER: A series of increasingly longer and revolving debt issues to accommodate interest rate risks and changes regardless of economic cycle.

LADY MACBEH STRATEGY: A faux white knight in a hostile corporate takeover attempt who joins or becomes the unfriendly bidder or takeover artist.

LAFFER, ARTHUR; CURVE: Suggestion that domestic economic output grows with decreased marginal income tax rates.

lagging economic indicator: An economic benchmark such as the unemployment rate, which changes after the economy has started to follow a particular trend.

LAISSEZ-FAIRE: Suggestion that governmental economic intervention in business and finance is kept to a minimal.

LAPSE: To expire or loose certain rights and privileges.

LARGE CAP: Companies with a large market capitalization rate (share number outstanding times share price); usually in excess of five billion dollars.

LAST-IN; FIRST OUT (LI-FO); FIRST-IN, FIRST-OUT (FIFO): An inventory costing method where the last costs into inventory are the first costs attributed to cost of goods sold. The ending inventory is based on the cost of the most recent purchases. Older costs are left in ending inventory.

LAST TRADING DAY: The final day for settlement of futures contracts.

LAUNDER: To make illicitly acquired cash appear legitimate.

LAW OF DEMAND: Principle that the lower the price of a healthcare good or service, the greater the quantity patient-consumers are able to purchase over time.

LAW OF DIMINISHING MARGINAL RETURNS: Principle suggesting that the extra production obtained from increases in variable healthcare inputs will eventually decline as more variable inputs is used with fixed inputs.

LAW OF DIMINISHING MARGINAL UTILITY: Principle suggesting that the marginal utility of any healthcare item or service tends to decline as more is consumed over a given period.

LAW OF INCREASING COSTS: Principle suggesting that the opportunity cost of each additional unit of healthcare output, increases over time as more of that good or service is produced.

LAW OF LARGE NUMBRS: Statistical concept where a greater number of units equates to less significance per unit.

LAW OF SUPPLY: Principle suggesting that the higher the price of a healthcare good or service, the greater the quantity that sellers are willing and able to make over time.

LEAD MANAGER (Senior Manager): The lead manager generally handles negotiations in a negotiated underwriting of a new issue of municipal securities or directs the processes by which a bid is determined for a competitive underwriting. The lead manager also is charged with allocating securities among the members of the syndicate according to the terms of the syndicate agreement and the orders received.

leading economic indicator: An economic benchmark such as new housing starts, which changes before the economy has started to follow a particular trend.

LEAPS (LONG-TERM EQUITY ANTICIPATION SECURITIES): Most options have a maximum life of 9 months. LEAPS can extend up to 3 years.

LEASE: The payment of a specific amount of money, over time, for the use of an asset.

LEDGER: The book of accounts.

LEG: A sustained trend in the financial markets.

LEGAL CAPITAL: Owner or stockholder equity not used for dividends.

LEGAL INVESTMENT: The ability of a particular security to meet the specifications of various states’ laws restricting the investment practices of institutions (particularly savings banks) located in the state. This matter is typically addressed in a” legal investment survey” conducted on behalf of the syndicate underwriting the security.

LEGAL LIST: Securities deemed acceptable as holdings for mutual savings banks.

LEGAL OPINION or APPROVING OPINION: The written conclusions of bond counsel that the issuance of municipal securities and the proceedings taken in connection therewith comply with applicable laws, and that interest on the securities will be exempt from federal income taxation and, where applicable, from state and local taxation. The legal opinion is generally printed on the securities.

LEGISLATIVE RISK: Chance that changes in law might affect the price of certain securities; positive or negative.

Lender: A bank, mortgage company, or mortgage broker offering a loan.

LEVELS: 1, 2, or 3: Level of service for NASDAQ trading firms:

  • Level 1 – A single average price quote for those not trading OTC.
  • Level 2 – Level 1 plus trade reports, executions, negotiations, networks, clearing; and bid-ask price quotes for all firms and customers.
  • Level 3 – Level 1 and 2, plus the ability to enter quotes, execute orders and send information, for and by market-makers.

LEMON: A poor investment.

LENDER: Temporarily granting asset us to another in return for interest.

LESSEE: The tenant in a lease or rental agreement.

LESSOR: Property owner in a lease or rental agreement.

LETTER OF CREDIT (LC): Document from a financial institution which guarantees client drafts up to a certain limit amount.

LETTER OF INTENT (LI): A pledge to purchase a sufficient amount of open-end investment company shares within a limited period (usually 13 months) to qualify for the reduced selling charge that would apply to a comparable lump-sum purchase.

LETTER SECURITY: An unregistered security offered privately in which the purchaser is obliged to sign an investment letter to complete the transaction and to forestall disciplinary action against the seller under the Securities Act of 1933.

LEVEL DEBT SERVICE: A maturity schedule in which the combined annual amount of principal and interest payments remains relatively constant over the life of the securities issue

LEVEL LOAD: A sales commissions or charge that remains steady over time.

LEVERAGE: A financial condition brought about by the assumption of a high percentage of debt in relation to the equity in a healthcare corporation’s capital structure. Leverage is the use of borrowed money, or lever.

LEVERAGE FACTOR: Ratio of debt to total assets.

LEVERAGED BUYOUT: The usually hostile takeover of a company with borrowed funds, such as junk bonds. Assets are then usually stripped to pay the debt.

LVERAGED STOCK; SECURITIES: Stock or other securities purchased on loan, with debt, or on margin.

LEVERED BETA: The beta reflected in a company whose capital structured includes debt financing.

LIABILITY: An unclaimed insurance obligation.

LIABILITY DETERMINATION: Determination based on §1879 or §1870 or §1842(L) of the Act, of whether the beneficiary and the provider did not and could not have been reasonably expected to know that payment would not be made for services.

LIABILITY INSURANCE: Protection against claims based on negligence or inappropriate action or inaction, which results in bodily injury or damage to property.

LIABILITIES: A healthcare organization’s legal obligations to pay creditor. All the outstanding claims for money against a healthcare corporation: accounts payable, wages and salaries, dividends declared or payable, accrued taxes, fixed or long-term liabilities as mortgage bonds, debentures and bank loans.

LIBOR: London Interbank Offered Rate is the rate international banks charge each other and varies throughout each business day reflecting global economic conditions. Standard LIBOR index rates (averages, fixed at a specific time each day) are published for various maturity terms.

LICENSE: Federal or state charter granting its holder the right to practice a profession, such as medicine, podiatry, dentistry, etc.

LIEN: Security interest in an asset of a secured loan.

LIFE CYCLE BUDGET: The estimated projection of a product’s cost and revenues over its useful life.

LIFT: An increase in securities prices, a sector or the financial markets.

LIGHTEN UP: To sell securities for diversification, profit-taking or other purposes.

LIKE-KIND-EXCHANGE: The swap of two similar assets.

LIMITED APPRAISAL: The appraisal of a healthcare or other business entity with restrictions in the analysis, or the scope of project

LIMIT ORDER: A securities order in which a customer sets a maximum price he is willing to pay as a buyer and a minimum price he is willing to accept as a seller.

LIMITED ACCESS TO BOOKS AND RECORDS: A shareholder’s right to inspect financial information made public in accordance with federal, state, exchange, and National Association of Securities Dealers (NASD) regulations.

Limited liability company: A relatively new form of business entity authorized in more than half of the states. It has certain attributes of both a regular corporation and a partnership. Most notably, its “members” and there must be at least two, can operate the business like a general partnership while retaining the limited personal liability that is most often associated with the corporate form.

LIMITED PARTNERRSHIP: Association of two or more persons, including one or more general partners (each of whom has unlimited liability), and one or more limited partners (whose individual liability is limited).

LIMITED TAX BOND: A general obligation bond secured by the pledge of a specified tax (usually the property tax) or category of taxes that are limited as to rate or amount.

LINE ITEM BUDGET: Format that lists expenses and revenues by category, and may be also known as a program or performance budget.

LINE OF CREDIT: A pre-authorized contract between a potential borrower and lender under certain terms and conditions of the contract.

LIQUID ASSET: Asset easily and quickly converted to cash with out price loss.

LIQUIDATING DIVIDEND: Return of capital to medical suppliers and vendors in the dissolution of a healthcare or other organization.

LIQUIDATING VALUE: Rock-bottom asset prices for companies or healthcare entities going out-of-business.

LIQUIDATION: Refers to the sequence of payouts when healthcare corporations go bankrupt. The order is as follows: 1. Internal Revenue Service 2. Secured creditors, including senior bondholders. 3. Unsecured creditors including junior bonds (debentures) 4. Preferred stockholders. 5. Common stockholders.

LIQUIDATION VALUE: The net amount possibly realized when the assets of a healthcare or other business enterprise are sold individually, in an orderly but forced fashion; fire sale asset value.

LIQUIDITY: The speed at which an asset can be converted to cash. Or:  (1) the ability of the market in a particular security to absorb a reasonable amount of trading at reasonable price changes. Liquidity is one of the most important characteristics of a good market. (2) The easy ability of investors to convert their securities holdings into cash and vice versa.

LIQUIDITY RATIOS: Relationships of short-term obligation payment abilities (i.e., quick ratio, current ratio, etc).

LISTED FIRM: A company whose stock trades on one of the financial exchanges.

Listed option: A put or call traded on a national option exchange with standardized terms. In contrast, over-the-counter options usually have non-standard or negotiated terms.

LISTED SECURITY: An organized exchange traded security.

Listed stock: Stock that trades on one of the registered securities exchanges. “Listed” usually implies listing on the two major exchanges—the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX). “Unlisted” company’s trade “over the counter,” usually through the National Association of Securities Dealers Automated Quotation System (NASDAQ). Listed stock symbols are three letters; unlisted symbols are four or more letters.

LISTING REQUIREMENTS: The accounting rules and financial regulations required before company stock can be listed on a financial exchange.

load: The amount added to net premiums (risk factor minus interest factor) to cover the company’s operating expenses and contingencies. The loading includes the cost of securing new business, collecting premiums, and general management expenses. Precisely, it is the excess of the gross health insurance premiums over net premiums.

loading charge: The additional charge for overhead costs added to health insurance or other net premiums.

LOAD FUND: A mutual fund which charges a sales commission or load.

LOAN AGREEMENT: A legal contract between a debtor and creditor that spells out the terms and conditions of a loan (i.e., indenture).

Loan Terms: The conditions that specify how a loan will be repaid and a borrower’s obligations until the loan is repaid. Some common loan terms include interest rate, fees charged and the length of the loan.

LOAN AMORTIZATION: To payback or extinguish a loan, bond or debt, often presented with a schedule for amortization.

Loan-to-Value Ratio (LTV) – The ratio determined by dividing the balance of a loan by the appraised value of its collateralized asset. For instance, if the balance on a loan is $80,000 and the appraised value of its backed assets $100,000, the LTV is 80%.

LOAN VALUE: The maximum permissible credit extended on securities in a margin account, presently 50 percent of the current market value of eligible stock in the account

LOANED FLAT: A loan without interest rate charges.

LOCKED MARKET: A very competitive financial market with similar bid and ask prices, and thus low spreads and sales commissions.

LOCK UP PERIOD: Six month agreement period where insiders do not sell shares following an Initial Public Offering (IPO).

LONG BOND: Government bonds with a maturity time frame greater than 10 years; usually 30 year US Treasuries, which suspended issuance in 2001, but was re-instituted on February 9, 2006.

LONG OPTION: An option that has been purchased.

Long position: A term used to describe either an open position that is expected to benefit from a rise in the price of the underlying stock (such as long call, short put, or long stock) or an open position resulting from an opening purchase transaction such as long call, long put, or long stock; securities bought or owned outright.

LONG RUN: An adequate time period for healthcare producers to vary all inputs required to produce outputs.

LONG RUN COMPETIVE EQUILIBRUM: Healthcare industry-condition where there is no tendency to enter, leave, expand or contract the scale of operations.

LONG RUN COST: Minimum expenditure producing any given healthcare output when all healthcare inputs are variable.

LONG TERM: An accounting time period of more than one year.

LONG TERM ASSET: Any assets other than a current asset; usually longer than one year.

LONG TERM DEBT: Debt for more than a year’s term

LONG TERM INVESTMENTS: Non-current assets not used for daily business operations, but for capital appreciation and dividends for more than a year.

LONG TERM LIABILITY: Any liability other than a current liability; usually longer than one year.

LONG TERM SOLVENCY: The ability to generate enough cash to pay long term debts as they become due or mature.

LONGITUDINAL DATA: Financial, economic, business, accounting or other information for multiple periods.

LOOPHOLE: Circumvention of the spirit, but not letter of the law; technicality.

LORENZ CURVE: Visual graph of income enjoyed by each percentage of households, ranked according to income.

LOSS: Excess of business expenses over revenues.

loss ratio: The percentage of health or other insurance losses in relation to premiums.

loss reserve: Estimated liability for unpaid health or other insurance claims or losses that have occurred as of any given valuation date. Usually includes losses incurred but not reported, losses due but not yet paid, and amounts not yet due.

LOW: Lowest, or the most minimal value a security holds during a specific time period.

LOW LOAD: A small sales commission on a financial product.

LOWER OF COST OR MARKET (lCM) METHOD: Financial statement report of assets at whichever cost is lower: historic cost, or market value.

Lump-sum distribution: The withdrawal of an individual’s entire balance from an employer-sponsored retirement plan or a Keogh plan. Lump-sum distributions may be eligible for special income tax treatment.

M-P Terminology


M: A designation indicating that a number is to be read in thousands. For example, a                        transaction for “350M hospital bonds” would involve securities having a par value of $350,000. Numbers in millions are often indicated by the designation “MM”.

mAC: Maximum Allowable Costs.

MACROECONOMIC EQILIBRIUM: Point where the aggregate quantity demanded for healthcare products or services equals the aggregate quantity supplied.

MAIL FLOAT: Time lag between healthcare payer invoicing and ultimate receipt of payment for medical service rendered.

Maintenance call: Sometimes called a “margin call”; a demand on a customer with a margin account to deposit cash or securities to cover account minimums required by regulatory agencies and the brokerage firm. Because these minimums are based on the current value of the securities in the account, maintenance calls can occur as a result of movements in the market price of securities.

MAINTENANCE MARGIN: The minimal amount of money in a margin account that triggers a margin call for more funds.

MAJORITY CONTROL: The premium for a healthcare business entity that exists when provided by a major or majority position of management.

MAJORITY INTEREST: Ownership interest in a healthcare or other business interest that exceeds fifty percent.

MAKE-A-MARKET: To maintain firm offer and bid prices in a given public security by being ready to sell or buy round lots.

MALONEY ACT: Amendment of the SEC Act of 1934 which provided for Self Regulatory Agencies in the OTC market.

MANAGED ACCOUNT: A discretionary account managed by a third party on behalf of the client.

MANAGEMENT ACCOUNTING: Non-FASB accounting techniques which focus on information for internal business decision makers.

MANAGEMENT BUYIN / BUYOUT: Large stock purchases by outside investor’s n order to retain existing management / large stock purchases by corporate management to take a company private.

MANAGEMENT COMPANY: An investment company that conducts its business in a manner other than as a face-amount certificate company or unit Investment Company.

MANAGEMENT EXCPETION: Focuses on differences between real and budgeted amounts.

MANAGEMENT FEE: Amount paid to the investment manager for its services in the supervision of the investment company’s affairs. This fee is set as a percent of the company’s net assets. It usually is between l/2 and 1% of average annual net assets.

MANAGER: The member {or members) of an underwriting syndicate charged with primary responsibility for conducting the affairs of the syndicate. The manager generally takes the largest underwriting commitment. Or, an organization that serves an open-end investment company as an investment adviser; meaning the entity that manages the portfolio.

MANAGERIAL ACCOUNTING: Accounting branch that focuses on information for internal business decision makers.

MANAGERIAL FINANCE: Healthcare economics and related allocation resource decisions in related goods, services and DME products.

MANDATORY REDEMPTION ACCOUNT: A separate account in the sinking fund into which the issuer makes periodic deposits of moneys to be used to purchase bonds in the open market or to pay the costs of calling bonds in accordance with the mandatory redemption schedule in the bond contract. Such an account may also be known as a bond amortization fund.

MANIPULATION: The creation of false activity by the frequent buying and selling of a security.

MARGIN: The amount of equity required in an account carried on credit, presently 50 percent of total cost for eligible stock under Federal Reserve regulations, OR, corporate revenues less expenses. An amount, usually a percentage, is added an index to determine the interest rate for a variable loan at each adjustment period. For example, if the index is at 5.0, and the margin is 1.5, the interest rate is 6.5%.

Margin account: Brokerage account established to extend credit to the customer.

An account in which a customer uses credit from a broker/dealer to make purchases beyond the actual cash deposited in the account. The extension of credit by broker/dealers is regulated by the Federal Reserve Board under Regulation T as called for in the ‘1934 Securities Act.

MARGIN CALL (MAINTENANCE MARGIN CALL): A demand on the customer to deposit money or securities with the broker/dealer when a purchase is made or when the customer’s equity in a margin account declines below a minimum standard set by an exchange, the NASD, or the firm.

MARGIN OF SAFETY: The excess of expected sale or service revenues over break-even amounts.

MARGIN REQUIREMENT: The minimum amount that must be put up in cash to buy securities and established by the Federal Reserve.

MARGIN SECURITY: According to Regulation T of the Federal Reserve Board, a margin security is any stock, right, or warrant traded on one of the registered stock exchanges in the U.S., an OTC stock specifically declared eligible for credit by the Federal Reserve Board, or a debt security traded on one of the registered stock exchanges that either is convertible into margin stock or carries a right or warrant to subscribe to a margin stock.

MARGINAL BENEFIT: The economic dollar value placed on another unit of a healthcare product or services.

MARGINAL BENEFIT OF WORK: the extra income received from additional work including non-financial satisfaction from healthcare employment.

Marginal Cost: The additional cost incurred by increasing the scale of a healthcare or other program (usually differs from average cost by one unit).

MARGINAL EFFICIENCY OF CAPITAL: A list of the internal rate of return on invested capital.

MARGINAL EXTERNAL BENEFIT: The additional economic benefit derived from an externality.

MARGINAL EXTERNAL COST: The additional cost involved using one additional unit of healthcare input.

Marginal INPUT Cost: The additional cost incurred by using one additional healthcare or other input unit.

MARGINAL PRODUCT OF LABOR: The additional healthcare output resulting from the addition of an extra input of healthcare or medical labor.

Marginal PROFIT: The change in profit from selling an additional unit of healthcare product or service. Also, the different between marginal revenue and marginal cost.

MARGINAL PROPENSITY TO CONSUME HEALTHCARE: The percentage of disposable dollars allocated to consume healthcare or other purchases.

MARGINAL PROPENSITY TO SAVE: The percentage of disposable dollars allocated to save rather than spend.

MARGINAL RATE OF SUBSTITUTION: The quantity of healthcare product or services goods, one would give up for another, if similar.

MARGINAL RESPENDING: The additional purchase of healthcare products or services that result from each extra dollar of income.

MARGINAL REVENUE: The additional revenue obtained by selling an additional unit of product or service.

MARGINAL TAX RATE: Tax rate paid on the last additional dollar of income.

MARGINAL UTILITY: The additional satisfaction received by consuming an addition healthcare service or production unit.

MARK-TO-THE MARKET: As the market value of a margined security declines, the broker/dealer will demand more in cash to maintain the minimum requirement. The written notice for such demand is a mark to the market.

MARK-DOWN: For SEC/NASD regulatory purposes, the remuneration received by a dealer or dealer bank selling securities as principal on behalf of a client o a dealer third party. The remuneration consists of the differential between the price of the sale to the third party and the (lower) price paid to the customer by the dealer.

MARK-UP: The fee charged by a broker/dealer acting as a dealer when he buys a security from a market-maker and sells it to his customer at a higher price. The markup is included in the sale price and is not itemized separately in the confirmation except on a simultaneous (risk less) transaction.

MARK-UP/DOWN POLICY: An NASD guideline that basically states a markup, markdown or commission must be “fair and reasonable, taking into consideration all relevant factors.

MARKET: An organized public arrangement where buyers and sellers meet to transact business.

MARKET APPROACH: A comparable value market approach method to appraising a healthcare firm or business entity based on similar or comparable values of entities in the same or similar healthcare space.

MARKET BASKET: A combination of healthcare products and services.

Market Basket Index: An index of the annual change in the prices of goods and services providers used to produce health or other goods and services. There are separate market baskets for Prospective Payment System (PPS) hospital operating inputs and capital inputs; and Skilled Nursing Facilities, home health agency and renal dialysis facility operating and capital inputs.

MARKET BREAK: A sudden drop in the stock market.

Market capitalization: The current stock price of a company multiplied by the number of common shares, outstanding. The higher the market capitalization is relative to book value, the more highly the investment community values the company’s future.

MARKET CAPITALIZATION OF INVESTED CAPITAL: Market value of equity, plus the market value of the levered debt portion of invested capital.

MARKET CLEARING PRICE: A price at securities or related market equilibrium; balanced prices.

MARKET DEMAND CURVE: A curve that is downward sloping to the right showing the relationship between a healthcare product’s price and the quantity demanded of those services.

MARKET DEMAND CURVE FOR LABOR: A curve showing the relationship between the price of healthcare labor and total amount of labor demanded for those services.

MARKET DEMAND FOR INPUT: The sum of quantity demanded by all healthcare entities and other employees using that input at any given price level.

MARKET EQUILIBRIUM: An economic condition of balanced demand and supply in healthcare, financial, business or other markets.

MARKET FAILURE: Inability of the pricing system to allocate healthcare resources efficiently among buyers and sellers of products or services.

MARKET JITTERS: Uneasy felling in the financial markets which might induce panic buying or selling.

MARKET MAKER: A NASD broker / dealer ready to provide continuing bids and offers for a given security in the secondary market.  An exchange member on the trading floor who buys and sells for his own account and who is responsible for making bids and offers and maintaining a fair and orderly market.

MARKET MULTIPLE: The market value of a healthcare firm’s invested capital or equity divided by a given benchmark measure, such as number of patients, economic benefits, etc.

MARKET ON CLOSE (MOC): The purchase or sale of securities as close to the final market bell (day closing) as possible.

MARKET ORDER: An order executed immediately at the best available price. A trading instruction from an investor to a broker to immediately buy or sell a security at the best available price.

MARKET PERFORMANCE: A benchmark measure of financial markets, or securities performance.

MARKET RATE: Competitive rate of return.

MARKET RATE INTEREST: The current fair value trade rate for the same or similar securities.

MARKET RISK: The tendency of a securities price to change with the overall marketplace; or systemic risk.

MARKET SHARE: The percentage of healthcare or other industry sales of a particular healthcare product, good, service or company.

MARKET SUPPLY CURVE: A curve that is downward sloping to the right showing the relationship between a healthcare product’s price and the quantity supplied.

MARKET SUPPLY CURVE; FOR LABOR: A curve showing the relationship between the price of healthcare labor and total amount of labor supplied in the market.

MARKET SUPPLY OF INPUT: Ratio between price and quantity and quantity supplied of a healthcare input.

MARKET SWEEP: Institutional sales offer, after a public tender offer, in order to enhance company control.

Market timing: Buy and sell strategy based on general outlook, such as economic factors or interest rates, or on technical analysis. Trying to predict the gains and declines of the market and then buying at market lows and selling at market highs.

MARKET TONE: Emotional atmosphere of financial markets.

MARKET VALUE (MV): The price of medical or healthcare services bought or sold on the open market, with transparency, free flow of information and no coercion.

MARKETABLE SECURITIES: Short term claims that can be sold or bought in the capital markets (T-bills, CDs, short term paper loans).

MARKETABILITY: The ease or difficulty with which securities can be sold in the market. An issue’s marketability depends upon many factors, including its interest rate, security provisions, maturity and credit quality, plus (in the case of the sale of a new issue) the size of the issue, the timing of its issuance, and the volume of comparable issues being sold.

Marketability discount: The dollar amount or percentage that is deducted from an equity interest to reflect lack-of-marketability.

MARKETABLE: Easily sold liquid assets.

MARKETABLE SECURITIES: Investments and financial products easily sold and very liquid.

MARKETING: Moving medical goods, products and service from the producers (doctors, hospitals, clinics, DME, drugs, etc), to the consumers (patients, Medicare/Medicaid, HMOs, insurance company, etc).

Married put strategy: The simultaneous purchase of stock and the corresponding number of put options. This is a limited-risk strategy during the life of the puts, because the stock can be sold at the strike price of the puts.

MASTER BUDGET: Budgeting financial statements, supporting schedules and information for an entire healthcare business enterprise.

MATCHED BOOK: The equalization of borrowing costs and interest rate costs.

matching principle; OF CONVENTION: The identification of expenses incurred during a reporting period in order to measure and match them against revenues in the same period.

matching principle; OF FINANCE: The economic suggestion that short- term financial needs should be addressed and satisfied with short-terms resources and products, and long-term needs with long-term resources and financial products.

MATERIAL ITEM: Topic of financial significance in a healthcare or other business entity that must be noted in financial statements according to GAAP.

materiality CONCEPT: Suggestion that proper accounting is performed only for items.

and transactions that are significant to business financial statements.

MATERIALS BALANCE: Place where input supply equals its demand for an intermediate healthcare product or service.

Maturity: The date on which a loan, bond, or debenture comes due; both principal and any accrued interest due must be paid.

Maximum Allowable Charge: The amount set by an insurance company as the highest amount that can be charged for a particular medical product or service. The limit on billed or invoiced charges for Medicare patients by non-participating providers.

Maximum Allowable Cost (MAC) List: A list of prescriptions where the reimbursement will be based on the cost of the generic product.

MAY DAY: The expiration date of fixed brokerage commission in the USA (May 1, 1975).

MBIA (MUNICIPAL BOND INSURANCE ASSOCIATION): An association of five insurance companies (The Aetna Casualty & Surety Co., Fireman’s Fund Insurance Companies, The Travelers Indemnity Company, CIGNA Corporation, and The Continental Insurance Company) which offers insurance policies on qualified municipal issues under which the payment of principal and interest when due is guaranteed, in the event of issuer default. The two principal rating agencies assign their highest ratings to all hospital and municipal issues insured by MBIA.

MEAN (ARITHMETIC): The measure of central location commonly called the average. It is calculated by adding together all the individual values and dividing by the number of values in the group.

MEAN (GEOMETRIC): The mean or average of a set of data measured on a logarithmic scale.

Mean rate of return: The return that is between two extreme returns.

MEANS TEST: Income standards above or below certain accepted values.

MEDIAN: The measure of central location that divides a set of data into two equal parts.

MEDICAID: A Title 19 Federal program, run and partially funded by individual states to provide medical benefits to certain low-income people. The state, under broad federal guidelines, determines what benefits are covered, who is eligible, and how much providers will be paid. All states but Arizona have Medicaid programs.

Medical Cost Ratio (MCR): Compares the cost of providing service to the amount paid for the service.

Medical Savings Account (MSA): A health insurance option consisting of a high-deductible insurance policy and a tax-advantaged savings account. Individuals pay for their own health care up to the annual deductible by withdrawing from the savings account or paying out of pocket. The insurance policy would pay for most or all costs of covered services once the high deductible is met.

MEDICARE: A nationwide, federal health insurance program for people aged 65 and older. It also covers certain people under 65 who are disabled or have chronic kidney disease. Medicare Part A is the hospital insurance program; Part B covers physicians’ services. Created by the 1965 Title 18 amendment to the Social Security Act.

MEDICARE APPROVED AMOUNT: The Medicare payment amount for a covered service that may be less than the actual amount charged.

Medicare Cost Contract: A contract between Medicare and a health plan under which the plan is paid on the basis of reasonable costs to provide some or all of Medicare-covered services for enrollees.

Medicare Cost Report (MCR): An annual report required of all institutions participating in the Medicare program. The MCR records each institution’s total costs and charges associated with providing services to all patients, the portion of those costs and charges allocated to Medicare patients, and the Medicare payments received.

Medicare Economic Index (MEI): An index that tracks changes over time in physician practice costs. From 1975 through the present, increases in prevailing charge screens are limited to increases in the MEI.

MEDICARE MEDICAL SAVINGS ACCOUNT: Medicare Medical Savings Account (MMSA) health insurance with a high deductible, along with a savings account to pay healthcare expenses and medical bills.

MEMBER BANK: A bank in the Federal Reserve Bank (FRB) system.

MEMBER FIRM: A brokerage firm with membership on at least one financial stock exchange.

MERCANTILE AGENCY: A supplier of credit ratings and other financial, accounting and economic information.

MERGER: The combination of a single firm, from two of more existing companies.

MERGERS AND ACQUISITIONS METHOD: Valuation market approach method.

that derives pricing multiples from prior transactions relative to similar or same companies in the same healthcare industry space.

MEZZANINE LEVEL: The time period just prior to the initial public offering (IPO) of a healthcare organization or other company.

MICROECONOMICS: Price theory or the study of choices made by patients in the healthcare industrial complex.

MID-CAP: Companies with a mid-level market capitalization rate (share number outstanding times share price); usually between one and five billion dollars.

MID-YEAR DISCOUNTING: Valuation discounted future earning method which relays economic benefits generated at midyear while estimating the same benefits generated for the remainder of the year.

MIG: The designation used by Moody’s Investors Service in rating municipal notes. The term is an acronym for “Moody’s Investment Grade” and, in specific ratings, is followed by the number 1, 2, 3, or 4, denoting successively lower levels of quality.

MILL: One tenth (1/10) of a penny.

Minimum Amount Due: A loan payment option that covers the minimum amount due monthly. With many adjustable rate loans, payment may not always cover the total interest due. This unpaid portion is called “deferred interest,” which is added to the loan balance. Other loan payment options do not provide for deferred interest.

MINIMUM MAINTENANCE: Lowest amount of equity in a brokerage margin account permissible.

Minimum Payment: The minimum amount owed, usually monthly, on a loan or line of credit. In some plans, the minimum payment may be “interest only” (simple interest). In other plans, the minimum payment may include principal and interest (amortized).

MINIMUM WAGE: Hourly amount paid to workers according to federal statute.

Minority interest: An ownership position with less than 50% of the voting interest in an enterprise.

Minority discount: The dollar amount or percentage deducted from the pro rata share of the value of the entire business to reflect the absence of the power of control.

MINORITY INTERST: Less than fifty percent ownership or voting interest in a healthcare or other business entity.

MINUS TICK: A transaction on the Stock Exchange at a price below the previous transaction in a given security.

MISERY INDEX: Emotional benchmark combining the inflation and unemployment rates.

MIXED COST: A part fixed and part variable cost.

MOB SPREAD: Yield differential between Federal Treasure and State Municipal bonds.

MODE: A measure of central location, the most frequently occurring value in a set of health data points.

MODEL: Mathematical design, reproduction, research and forecast of an economic, financial or accounting situation.

Modern portfolio theory: An approach to portfolio management that uses statistical measures to develop a portfolio plan.

Modified accelerated cost recovery system (MACRS): Similar to ACRS. Under MACRS the cost of eligible property is recovered over a 3-, 5-, 7-, 10-, 15-, 20-, 27.5-, 31.5-, or 39-year period, depending on the type of property using statutory recovery methods and conventions. Generally applies to most tangible depreciable property placed in service after 1986.

MODIFIED CASH ACCOUNTING: Modification of cash basis accounting in which certain items are included in financial statements (i.e., depreciation).

MOMENTUM: Rate of economic, business or financial acceleration.

MONETARIST: Belief that money supply is the most important economic factor in the US.

MONETARY POLIcY: Federal Reserve Board (frb) actions that determine the rte and size of money supply growth and interest rates, through the Federal Open Market Committee (FOMC).

Monetization: A strategy that allows an investor to generate cash from a position without realizing a sale of the underlying position.

MONEY: Physical or electronic medium, and common exchange denominator, of value.

MONEY MARKET: Market for cash, ultra-short term debt issues and checks.

Money Market Account: A checking account that earns interest generally comparable to Money Market Funds, although the rates paid by any particular bank may be higher or lower.

Money market deposit account: An account instrument offered at a banking institution that has features similar to a money market mutual fund. Accounts under $100,000 are insured by the Federal Deposit Insurance Corporation.

Money market mutual fund: A registered investment company that invests in securities that have short-term maturities (usually from several days to several weeks). An investment vehicle whose primary objective is to make higher interest securities available to the average investor who wants immediate income and high investment safety. This is accomplished through the purchase of high-yield money market instruments, such as U.S. government securities, bank certificates of deposit, and commercial paper.

MONEY MARKET INSTRUMENTS: Obligations that are commonly traded in the money market. Money market instruments are generally short-term and highly liquid. In addition to certain U .S. Government securities, such as T-bills, the following are commonly traded in the money market.

MONEY SUPPLY: The amount of money in circulation. The money supply measures currently (1985) used by the Federal Reserve System are:

  • M 1 – Currency in circulation + demand deposit + other check-type deposits. 35
  • M2 – M 1 + savings and small denomination time deposits + overnight repurchase agreements at commercial banks + overnight Eurodollars + money market mutual fund shares.
  • M3 – M2 + large-denomination time deposits (Jumbo CDs) + term repurchase agreements.
  • M4 – M3 + other liquid assets (such as term Eurodollars, bankers acceptances, commercial paper, Treasury securities and U.S. Savings Bonds).

MONOPOLY POWER: The ability of a healthcare entity to influence its price by making more or less product or service available to patients.

MONOPSONY POWER: A single input purchaser in a healthcare market without rivals.

MOODY’S INVESTMENT GRADE (MIG): Rating assigned by Moody’s Investors Service, Inc (MIS).

MOODY’S INVESTORS SERVICE (MIS), INC. An independent service subsidiary of Dun & Bradstreet, that provides dent and solvency ratings to various financial services companies, of hospital and municipal securities and other financial information to healthcare sector and other investors.

MORAL BACKING: Non-legal backing of a debt issue.

MORAL OBLIGATION BOND: A bond, typically issued by a state agency or authority, which is secured by the revenues from the financed project and, additionally, by a non-binding undertaking that any deficiency in pledged revenues will be reported to the state legislature which may apportion state moneys to make up the shortfall. Legislation authorizing the issuance of moral obligation securities typically grants the state legislature the authority to apportion money to support the debt service payments on any such securities, but does not legally oblige the legislature to do so.

MORAL SUASION: Exhortations to follow suit in the absence of legal enforcement powers.

MORNINGSTAR RATING SYSTEM: System for ranking and rating closed and open ended investments (mutual funds) and annuities by Chicago based Morningstar, Inc.

MORTGAGE: Creditor claim (loan) on real estate assets.

MORTGAGE BOND: The most prevalent type of secured corporate bond, as bondholders are protected by the pledge of a corporation’s real assets (real estate), evaluated at the time of issuance.

MOST ACTIVE LIST: Equities with the most shares traded on a specific day.

MOVING AVERAGE: The omission of the most distant price data (technical analysis), and the inclusion of the most recent rice data; when computing the average or mean price securities or markets; oversold or overbought measurement.

MULTIPLE: Inverse of a capitalization rate. The “relative multiple” is the company’s P/E ratio relative to the multiple of the market, usually the S&P 500, but sometimes the price/earnings ratio of an index that more closely mirrors the company’s sector.

Multiple Party Account: Account owned by two or more parties. Parties own the account during the lifetime of all parties in proportion to their net contributions, unless there is clear and convincing evidence of a different intent.

MULTIPLIER EFFECT: Money supply expansion from Federal Reserve member banks who lend money enhancing its supply.

MULTI-NATIONAL FIRM: A firm that makes direct investments in other countries.

MULTI-SERVICE FIRM: A healthcare company that provided many different products and services.

MULTI-YEAR BUDGET: A budget for more than a year, and usually two to five years.

MUNI: Slang term for municipal security.

Municipal bonds: Municipal bonds are issued by state and local governments for building schools, bridges, hospitals, clinics or healthcare systems, and other municipal facilities. These bonds depend upon their tax base to generate the income to pay the interest and retire the debt. The most important feature of municipal bonds, however, is their tax-exempt status. While the interest earned is free from federal income tax, state and local governments may levy taxes on that income. Therefore, because of the tax advantage, municipalities can borrow at lower rates of interest than can corporations. The investor benefits because the tax advantages associated with the interest, albeit lower than that of corporate or government bonds, may provide a higher rate of return. Municipal bonds are usually sold in increments of $5,000 or more, although municipal bond funds may have lower minimums. Municipal bonds are available in various types, depending upon whether the debt is paid by the issuing authority or by the revenue earned from the facility.

MUNICIPAL BOND FUND: A mutual fund that invests in a broad range of tax-exempt bonds issued by state, cities, and other local governments. The interest obtained from these bonds is passed through to share owners free of federal tax. The fund’s primary objective is current income, while healthcare systems, clinics, entities and hospitals are often included in the fund.

MUNICIPAL BOND INSURANCE ASSOCIATION: An association of five insurance companies (The Aetna Casualty & Surety Co., Fireman’s Fund Insurance Companies, The Travelers Indemnity Company, CIGNA Corporation, and The Continental Insurance Company) which offers insurance policies on qualified municipal issues under which the payment of principal and interest when due is guaranteed, in the event of issuer default. The two principal rating agencies assign their highest ratings to all municipal issues insured by MBIA Members.

MUNICIPAL SECURITIES RULESMAKING BOARD or MSRB: An independent self-regulatory organization established by the Securities Acts Amendment of 1975, which is charged with primary rulemaking authority over dealers, dealer banks, and brokers in municipal securities. Its 15 members represent three categories-securities firms, bank dealers and the public -each category having equal representation on the Board.

MUNIFACTS: A private wire communication system originating in the New York editorial offices of The Bond Buyer. Munifacts transmits current bond market information that is printed out on terminals located in the offices of its subscribers.

MUTILALATED CERTIFICATE (NOTE or BOND): A certificate which has been tom, defaced or otherwise damaged to such an extent that information needed at the time of its redemption or to assure its validity is no longer ascertainable. A mutilated certificate cannot be used in a delivery until the certificate has been validated. The standards used in evaluating whether a certificate is mutilated are set forth in MSRB Rule G-12(e)(ix).

MUTILATED COUPON: A coupon that has been torn, defaced or otherwise damaged to such an extent that information needed at the time of its redemption or to assure its validity is no longer ascertainable. A security to which a mutilated coupon is attached cannot be used in a delivery until the coupon has been validated. The standards used in evaluating whether a coupon is mutilated are set forth in MSRB Rule G-12(e)(vii).

MUTUAL COMPANY: A company that has no capital stock or stockholders.  Rather, it is owned by its policy-owners and managed by a board of directors chosen by the policy-owners.  Any earnings, in addition to those necessary for the operation of the company and contingency reserves, are returned to the policy-owners in the form of policy dividends.

MUTUAL FUND: By common terminology, this is the same as open-end investment company. A mutual fund (open-end company) is a financial institution whose business is investing other people’s money. By pooling their resources, investors obtain supervision and diversification of their investments. Mutual fund shares are ordinarily redeemable by the holder at any time at net asset value. In most cases, new shares are offered for sale continuously at net asset value plus a fixed percentage as a sales charge. The assets of a mutual fund are the actual securities that it purchases, and its income consists of the dividends and interest on these securities. The earnings of the business are paid out in the form of dividends and capital gains distributions to the shareholders. Mutual funds do not issue bonds, debentures, or preferred stock.

MUTUAL FUND SYMBOL: Five letter exchange symbol ending with an X.

mutualization: The process of converting a stock insurance company to a mutual insurance company, accomplished by having the company buy in and retire its own shares.


NAKED OPTION: An uncovered option position. When the writer (seller) of a call option owns the underlying stock (said to be “long” the stock), the option position is a “covered call.” If the writer (seller) of a put option is short the stock, then the position is a “covered put.” Writing a covered call is the most conservative options strategy, but writing a covered put is the most dangerous because there is no limit to how high the stock can go and thus to how great the loss can be on the short sale.

NAKED OPTION WRITING: Selling of a naked (un-owned) option.

NARROW SPREAD: A small difference in asked and bid securities prices.

NASD: National Association of Securities Dealers.

NASDAQ Composite Index: A market-value weighted index of the stocks listed on the NASDAQ Stock Market. This index is often used as an indicator of the performance of small company stocks.

NASDAQ: National Association of Securities Dealers Automated Quotations (NASDAQ).

NATIONAL ASSOCIATION OF SECURITIES DEALERS (NASD): A voluntary association of broker/dealers in over-the-counter securities organized on a nonprofit, non-stock-issuing basis. The general aim is to protect investors in the OTC market. It is the Self- Regulatory Organization (SRO) for broker/dealers in the OTC market.

NATIONAL ASSOCIATION OF SECURITIES DEALERS AUTOMATED QUOTATIONS (NASDAQ): An electronic data terminal device-furnishing subscribers with instant identification of market makers and their current quotations, updated continuously.

National Credit Union Administration: An agency of the United States government that insures deposits in healthcare and other credit unions.

National Credit Union Share Insurance Fund: A program of the National Credit Union Administration that insures shareholders of credit unions.

NATIONAL HEALTH INSURANCE: Financial, access and delivery systems where all citizens have access to healthcare services, goods, and products, including drugs.

NATIONAL MEDIAN CHARGE: The national median charge is the exact middle amount of the amounts charged for the same medical service. This means that half of the hospitals and community mental health centers charged more than this amount and the other half charged less than this amount for the same service.

NATIONAL UNIFORM BILLING COMMITTEE: An organization, chaired and hosted by the American Hospital Association, that maintains the UB-92 hardcopy institutional billing form and the data element specifications for both the hardcopy form and the 192-byte UB-92 flat file EMC format. The NUBC has a formal consultative role under HIPAA for all transactions affecting institutional health care services.

NATURAL MONOPOLY: A single seller in the marketplace due to some competitive advantage or externality.

NEAR MONEY: Assets that can be quickly converted into cash, such as government bills and notes.

NEGATIVE AMORTIZATION: Deficit financing where payments are les than borrowing costs, thereby increasing the principle amount rather than decreasing it.

NEGATIVE CARRY: Deficit financing where payments for financial futures positions are less than borrowing costs, thereby increasing the principle amount rather than decreasing it.

NEGATIVE EXERNALITY: Cost not reflected in the price associated with the use of healthcare resources and inputs.

NEGATIVE PLEDGE: A bond terms and conditions covenant restricting liens on real estate to other creditors.

NEGATIVE WORKING CAPITAL: Situation where current liabilities exceed current assets.

NEGATIVE YIeLD CURVE: Graphical illustration where long-term interest rates are less than short-term interest rates.

Negatively correlated: Two financial securities that move in opposite directions.

NEGLECTED FIRM EFFECT: Tendency of smaller or unknown stocks to outperform the market.

NEGOTIATED SALE: The sale of new municipal securities by an issuer through an exclusive agreement with an underwriter or underwriting syndicate selected by the issuer. A negotiated sale should be distinguished from a competitive sale, which requires public bidding by the underwriters. The primary points of negotiation for an issuer are the interest rate and purchase price on the issue. The sale of a new issue of securities in this manner is also known as a negotiated underwriting.

NEGOTIABILITY: The easy ability to transfer title upon delivery.

NEGOTIABLE CD: A certificate of deposit with rates, terms and conditions individually determined.

NET: The amount by which a healthcare company’s total assets exceed its total liabilities, representing the value of the owner’s interest, or equity in the company.

NET ACOUNTS RECEIVABLE: The amount projected to be received by a payer of healthcare services.

NET ASSETS: Stockholder’s equity, net worth or assets minus liabilities on the balance sheet.

NET ASSET VALUE PER SHARE (NAV): The market worth of a mutual fund’s total resources, securities, cash and any accrued earnings-after deduction of liabilities, divided by the number of shares outstanding.

NET BENEFIT: The total benefit of a healthcare product or service purchased minus the dollar sacrifice needed to purchase that healthcare output.

NET BOOK VALUE: The balance sheet difference between total assets and total liabilities, or stockholder’s equity.

NET CHANGE: Change in securities prices from one day to the next.

Net earnings: For the self-employed taxpayer, net earnings represent revenues less expenses (accrual basis) or receipts less disbursements (cash basis). This term is comparable to net income before tax (NIBT) for the corporation.

NET INCOME: Excess of total income over total expenses for a healthcare the corporation.

NET INTEREST COST (NIC): A common method of computing the interest expense to the issuer of issuing bonds, which usually serves as the basis of award in a competitive sale. NIC takes into account any premium and discount paid on the issue. NIC represents the dollar amount of coupon interest payable over the life of the serial issue, without taking into account the time value of money (as would be done in other calculation methods, such as the “true interest cost” method). While the term “net interest cost” actually refers to the dollar amount of the issuer’s interest cost, it is also used to refer to the overall rate of interest to be paid by the issuer over the life of the bonds.

Net losses: For the self-employed taxpayer, net losses represent a situation where expenses exceed revenues or disbursements exceed receipts.

NET PATIENT SERVICE REVENUE: The operating revenue derived from the patient business operations of a healthcare entity.

NET PAY: Gross pay minus all allowed deductions.

NET PRESENT VALUE (NPV): The difference in amount between initial payment and related future cash inflows after cost of capital adjustments (interest rate), as of a specific date.

NET PROCEEDS FROM A BOND ISSUE: Gross funds received from a debt issue, minus underwriter, marketing, sales printing, advertising and other fees.net profits: A term broadly used to describe only the profits remaining after including all earnings and other income or profit and after deducting all expenses and charges of every character, including interest, depreciation, and taxes.

NET PROFIT MARGIN: Percentage of earnings after taxes and interest.

NET PURCHASES: All purchases less purchase discounts, allowances and returns.

NET QUICK ASSETS: Cash, ARs, marketable securities sans current liabilities.

Net sales: All sales revenues less sales discounts, allowances and returns.

NET TANGIBLE ASSET VALUE: Tangible assets (excluding non-operating and excess assets) value minus liabilities value.

NET WORKING CAPITAL: The difference between current asset and current liabilities for a healthcare or other entity.

NET WORTH: The surpluses and capital of a healthcare entity; but may occasionally refer to the common shareholder’s position, or assets minus liabilities plus stockholders equity.

NET YIELD: Rate of return on securities minus all costs.

NEW ISSUE: A security (usually stock) offered to the public for the first time; Initial Public Offering (IPO).

NEW ISSUE MARKET: Securities market for private businesses issuing shares to raise money.

NICHE: Particular specialty or area of expertise; such as the healthcare industrial complex.

NINE BOND RULE: All orders for nine listed bonds or less must be sent to the exchange floor for a diligent attempt at execution, unless a better price may be obtained Over-the-Counter or if the customer specifically directs the trade be done OTC.

NOB SPREAD: The difference between interest rate between Treasury bonds (long-term) and Treasury notes (short term).

NOISE: Un-substantiated activity in the financial markets.

NO-LOAD MUTUAL FUND: Mutual funds offered directly to the public at net asset value with no sales charge.

NOMINAL ACCOUNT OWNER: Account owner whose names securities are registered if other than the beneficial owner.

NOMINAL: Expressed in current dollars or actual money amounts.

NOMINAL DOLLARS: US dollars adjusted for inflation.

NOMINAL QUOTATION: An indication of the approximate market value of a security, provided for informational purposes only. A nominal quotation does not represent an actual bid for or offer of securities. A nominal quotation may also be referred to as an “indication”.

Nominal return: The return that an investment produces.

NOMINAL VALUE: A measurement of economic amount that is not corrected for change in price over time (inflation). Not expressing a value in terms of constant prices.

NOMINAL YIELD: The annual interest rate payable on a bond, specified in the indenture.

and printed on the face of the certificate itself (if a bearer bond). Also known as the coupon rate.

NOMINEE: A partnership established by a bank, securities firm or other corporation to be used as the holder of record for registered securities owned by the bank, securities firm or corporation. These entities register securities in the name of a nominee to avoid the difficulties of registering and transferring securities in a corporate name; additionally, this form of registration is satisfactory for purposes of delivery on inter-dealer transactions.

NON-ACCREDITED INVESTOR: One who does not meet the net-worth requirements of SEC Regulation D (rules 505 and 506).

NON-CURRENT ASSETS: Assets with a life of more than one year.

NON-CUMULATIVE PREFERRED: Preferred stock that does not accumulate dividends for later possible distribution if missed.

NON-CURRENT LIABILITIES: Liabilities with a life of more than one year.

Non-equity options: Any option that does not have common stock as its underlying asset. Non-equity options include options on futures, indexes, interest rate composites, and physicals.

Non-investment Grade Bond: Bonds considered by rating services like Moody’s or Standard & Poor’s to carry a higher risk of default, these bonds are typically given low credit ratings (ranging from BB to D). Also called “junk” bonds, these securities attempt to compensate investors for their higher risk by paying higher yields.

NON-OPERATING ASSETS: Those assets not required for ongoing healthcare or other business operations.

Non-operating expenses: Expenses incurred though non-healthcare related activities, like marketing, sales, and advertising.

NON-OPERATING INCOME: Healthcare entity income received though non-healthcare related activities, like marketing, sales, and advertising.

non-operating reVenues: Money earned from non-healthcare related activities.

NON-PRICE RATIONING: Free healthcare or other services on a first come-first served, basis.

NON-PROFIT: Organization prevented by law to distribute assets or profits to private citizens and may provide only certain services, such as healthcare; not-for-profit.

NON-PROFIT INSURANCE CONPANY: Companies exempted from some taxes to provide health or medical expense insurance on service basis.

NON-PRICE RATION: Providing free healthcare on a first-come, first-served, basis.

NON-PUBLIC INFORMATION: Material private information (good or bad) about a public company that may affect stock price.

Non-qualified benefit: Any employee benefit that does not meet the qualification standards of the Employee Retirement Income Security Act (ERISA).

Non-qualified deferred compensation (NQDC): An arrangement deferring the receipt of currently earned compensation that does not comply with the requirements for qualified plans.

Non-recurring expenses REVENUEs: Irregular healthcare business or other operating expenditures or revenues, the timing of which during a year may not be determined precisely, or expenditures that occur less frequently than monthly.

NON-RECOURSE FINANCING: Loans for which partners, both general and limited, have no personal liability. In healthcare facility real estate programs only the value of such loans, if qualified, is part of the partners’ basis in the partnership.

NON-REGULAR CASH FLOWS: Irregular cash flows from a project.

NON-SUFFICIENT FUNDS (NSF): A bounced check whose maker has insufficient funs to cover the draft.

NON-SYSTEMIC RISK: Company or industry specific risk; apart form the markets or economy as a whole (systematic risk).

NON-TAX QUALIFIED ANNUITY: An annuity that does not qualify for tax-deductibility of contributions under IRS codes. These annuities will be funded with after-tax dollars, but the earnings in the account will accrue tax deferred. It is important to note that at payout of the annuity all distributions in excess of the cost basis will be taxed as ordinary income.

NON-VALUE ADDED ACTIVITIES: Any activity that does not increase patient value.

NORMALIZED EARNINGS: The revised economic benefits of a company adjusted for non-recurring or unusual items eliminated from financial statements.

NORMALIZED FINANCIAL STATEMENTS: The revised economic benefits of a firm’s financial statements adjusted for non-recurring or unusual items or non-operating assets and liabilities.

NORMATIVE ECONOMICS: The healthcare economics of what a person or organization ought to do or be.

NORMAL TADING UNITS (NTUs): A round lot of 100 shares.

NORMALIZED EARNINGS: Company earnings adjusted for cyclic economic ups or downs.

NOT HELD ORDER: An order that does not hold the executing member financially responsible for using his personal judgment in the execution price or time of a transaction.

Not-for-Profit: Ownership group that includes certain healthcare organizations and all church-related and other facilities that are organized and operated under a policy by which no trustee or other person shares in the profits or losses of the enterprise.

NOTE: A written, short-term promise of an issuer to repay a specified principal amount on a date certain, together with interest at a stated rate, payable from a defined source of anticipated revenue. Notes usually mature in one year or less, although notes of longer maturities are also issued. The following types of notes are common in the municipal hospital–revenue bond market:

  • Bond Anticipation Notes (BANs): Notes issued by a governmental unit, usually for capital healthcare projects, which are paid from the proceeds of the issuance of long-term bonds.
  • Construction Loan Notes (CLNs): Notes issued to fund construction of hospital projects. CLNs are repaid by the permanent financing, which may be provided from bond proceeds or some pre-arranged commitment, such as a GNMA takeout.
  • Revenue Anticipation Notes (RANs): Notes issued in anticipation of receiving hospital or other revenues at a future date.
  • Tax Anticipation Notes (TANs): Notes issued in anticipation of future tax receipts, such as receipts of ad valorem taxes which are due and payable at a set time of the year.

notes payable: A legal obligation to pay creditors or holders of a valid lien or claim.

NOTES RECEIVALBE: A written promise for the future collection of cash.

NOTICE OF SALE: A publication by an issuer describing the terms of sale of an anticipated new offering of municipal securities. It generally contains the date, time and place of sale, amount of issue, type of security, amount of good faith deposit, basis of award, name of bond counsel, maturity schedule, method of delivery, time and place of delivery, and bid form.

NOW ACCOUNT: Negotiable Order of Withdrawal checking account that earns interest.

NSF CHECK: Non-Sufficient Funds; a bounced or dishonored check.

NUMBERED ACCOUNT: A brokerage or other account identified by something other than the customer’s name, and usually an identification number.

NYSE COMPOSITE INDEX: An index of all stocks listed on the New York Stock Exchange.


OBLIGATOIN: A legal responsibility as with a debt or loan.

ODD COUPON: An interest payment for a period other than the standard six months. A payment for a period of less than six months is a “short” coupon; a payment for a period of more than six months is a “long” coupon. Usually only the first interest payment on an issue would be an odd coupon, but some issues have an odd last coupon. The term might also be used to refer to an initial interest payment period of other than six months on a registered security.

ODD-LOT: An amount of stock less than the normal trading unit.

ODD-LOT THEORY: A theory of market activity stating that the small (odd-lot) investor frequently becomes a heavy buyer as the market peaks and sells heavily on balance in a declining market, just prior to a rally. In other words, do the opposite of them. The supposition that small investors, who tend to buy in smaller units than the standard round lot of 100 shares, are always wrong. The idea is to buy when odd-lot investors are selling and sell when they are buying. The theory has not proved to be correct in modern times and is no longer very popular.

OFF BALANCE SHEET FINANCING: The acquisition of assets or services with debt that is not recorded on the balance sheet, but may appear as a small footnote.

OFFER: The price at which a person is ready to sell a security or other asset.

OFFER WANTED (OW): Potential buyer notice for a potential seller; of securities.

OFFERING MEMORANDUM: Terms and conditions of a private securities placement.

Office of Thrift Supervision (OTS): Bureau of the Treasury Department that was authorized by Congress in the Financial Institutions Reform, Recovery and Enforcement Act of 1989, to charter, regulate, examine and supervise savings institutions.

OFFICE OF SUPERVISORY JURISDICTION (OSJ): An office set up by individual member firms in compliance with the NASD Rules of Fair Practice, managed by a registered principal, to administer a firm’s supervisory responsibilities in that and other offices.

OFFICIAL STATEMENT or FINAL OFFICIAL STATEMENT: A document published by the issuer which generally discloses material information on a new issue of municipal securities including the purposes of the issue, how the securities will be repaid, and the financial, economic and social characteristics of the issuing government. Investors may use this information to evaluate the credit quality of the securities.

OLIGOPOLY: A marketplace where a few sellers dominate the sales of a healthcare product or service.

OLIGOPSONY: The buy-side counterpart of an oligopoly.

OMEGA: A volatility pricing model for derivatives.

ON THE CLOSE; OPEN: A buy or sell securities order to be executed as close to possible to the close or opening or a trading day.

ON THE SIDELINES: Those individual not investing due to financial market volatility, or some other reason.

Online Banking: Personal and business account information accessible through a personal computer and the Internet.

Online Bill Pay: Bill payment available by computer internet service and allows bill payments to several different vendors. Paper checks are issued when payments are not available through bill payment.

OPEN ACCOUNT: A mutual fund account where a shareholder, by virtue of an initial investment in the fund, automatically has reinvestment privileges and the right to make additional purchases without a formal accumulation plan.

Open-End Credit: A consumer line of credit that may be used repeatedly up to an established overall limit. Commonly known as revolving credit or a charge account, in which the customer may pay in full or in installments that include a finance charge. The term does not include negotiated advances under an open-end real estate mortgage or a letter of credit.

Open-End Fund: A mutual fund formed to continuously issue and buy back shares to meet investor demand. The share price is determined by the market value of the securities held by the fund’s portfolio, and it may be higher or lower than the original purchase price. Open-end funds can range from load to no-load.

OPEN-END INVESTMENT COMPANY: Mutual funds that buys and sells securities for redemption by shareholders.

OPEN-END MANAGEMENT COMPANY: The technical term for a mutual fund.

OPEN-END PROVISION: A mortgage bond provision that enables a corporation to use the same real assets for more than one bond issue. In the event of default, creditors on all issues have equal claims.

OPEN INTEREST: Options with a strike price, expiration date and specific stock.

OPEN MARKET COMMITTEE: Federal Open Market Committee (FOMC).

OPEN MARKET OPERATIONS: The purchase or sale of government securities by the Federal Reserve.

OPEN-ORDER: A Good-Till-Canceled (GTC) order to purchase securities.

OPENING-INVENTORY: The cost of durable medical equipment (DME) and other supplies and inventory on-hand at the beginning of the year.

OPENING PURCHASE: A transaction in which an investor becomes the holder of an option. The position is terminated by entering a closing sale order, known as taking a long position.

OPENING SALE: A transaction in which an investor becomes a writer (seller) of an option. The position is terminated by entering a closing purchase order known as taking a short position.

Opening transaction: An addition to or creation of a trading position. An opening purchase transaction adds long options (or long securities) to an investor’s total position, and an opening sell transaction adds short options (or short securities).

OPERATING ACTIVITIES: Activities of a healthcare or other organization directly related to its mission statement.

OPERATING-BUDGET: The operational inflow and outflow projections of a healthcare or other entity.

OPERATING CASH FLOW: The cash flows received from the main business activities of a healthcare or other organization.

OPERATING EXPENSES: The expenses incurred from the main business activities of a healthcare or other organization. In the securities industry, the costs of running a mutual fund, which are paid out of a fund’s assets before earnings are distributed to fund shareholders.

OPERATING INCOME: The income earned from the main business activities of a healthcare or other organization.

OPERATING LEASE: A short term or cancelable rental agreement.

OPERATING LEVERAGE: The degree to which fixed costs are used in healthcare or other firms operations.

operating Margin: Income (loss) from health care operations plus mortgage interest expenses plus other interest expenses divided by net patient service revenue. This ratio indicates the percentage of net patient service revenue that remains as income after operating expenses, except interest expense, have been deducted.

OPERATINg PROFIT MARGIN: Percentage of services or sales before taxes or interest expense is deducted.

OPERATING RATIO: Any number of so-called financial percentages used to determine how well an organization is using its economic inputs to produce outputs; efficiency measurement.

OPERATING REVENUES: The revenues generated by a healthcare entity through its operational activities and provision of medical services.

operations: The normal activities of a healthcare entity, company or agency in the course of conducting its business.

OPERATIONS AND MAINTENANCE FUND: A fund established by the bond contract of a revenue bond issue into which moneys to be used for the purposes of meeting the costs of operating and maintaining the financed project are deposited. Under a typical revenue pledge, this fund is the first (under a net revenue pledge) or the second (under a gross revenue pledge) to be funded out of the revenue fund.

OPPORTUNITY COST: The revenue lost by missing another business opportunity.

Option: Contracts to buy (call option) or sell (put option) a security at a stated price within a stated time period. Puts and calls are “types” of options. All the same type options of the same security are said to be of the same “class.” Options of the same class may have different exercise prices (the stated buy or sell price, called the “strike price”) and different dates. All options of the same class with the same strike price and expiration date are called a “series.” The price of an option is called a “premium.” The price of a premium is made up of “intrinsic value” (the difference between the current price and the strike price) and “time value” (the difference between the premium and the intrinsic value). An option is said to be “covered” when the investor has another position that will meet the obligation of the option contract. When option rights are used they are “exercised”; unexercised options are said to “expire” after their set time period is up. A buyer of an option is called a “holder” and a seller is called a “writer.” (Note: Companies often offer employees “incentive options” as part of their compensation. These operate more like rights or warrants and allow the employee to purchase stock in the company at a specified price for a certain number of years.)

OPTION CLEARING CORPORATION (OCC): The issuer and guarantor of listed option contracts. Also serves as the clearing agency for listed options transactions. It is jointly owned by the participating exchanges.

OPTION SPREAD: The sales or purchase of options within the same contract class.

Option writer: The seller of an option contract who is obligated to meet the terms of delivery if the option holder exercises his or her right.

ORDER: An order for new issue municipal securities placed with a syndicate by a member of the syndicate, where the securities would be confirmed to that member at syndicate terms (e.g., less the total takedown).

ORDER PERIOD: The period of time following the competitive sale of a new securities issue during which non-priority orders submitted by account members are allocated without consideration of time of submission. The length of the order period is usually determined by the manager. In a negotiated sale the order period is the period of time established by the manager during which orders are accepted from account members. The order period generally precedes the sale by the issuer. At times order periods occur when securities are repriced or market conditions improve dramatically.

ORDERLY LIQUIDATION VALUE: The sale of business assets, overtime, in a manner to maximize sales proceeds.

ORDINARY ANNUITY: A series of payments received or made at the end of each predetermined payment period.

ORDINARY INCOME: Income derived from normal healthcare business operations, but not the sale of capital assets.

ORDINARY REPAIR: Any business repair work that creates revenue expenditure, debited to an expense account.

ORIGINAL HOUSE: The investment banking firm that syndicates or sells original securities issues to the marketplace.

ORIGINAL ISSUE DISCOUNT (OID): An amount by which the par value of a security exceeds its public offering price at the time it was originally offered to an investor. The original issue discount is amortized over the life of the security and, on a municipal security, is generally treated as tax-exempt interest. When the investor sells the security before maturity, any profit realized on such sale is figured (for tax purposes) on the adjusted cost basis, which is calculated for each year the security is outstanding by adding the accretion value to the original offering price. The amount of the accretion value (and the existence and total amount of original issue discount) is determined in accordance with the provisions of the Internal Revenue Code and the rules and regulations of the Internal Revenue Service.

ORPHAN STOCK: Stocks neglected by research analysts.

OTC BULLETIN BOARD: OTC electronic bid and ask stocks not meeting NASDAQ minimum requirements for listing; penny stocks.

OTHER EXPENSES: Miscellaneous cost or expense category.

OTHER INCOME: Miscellaneous income category.

OTHER REVENUE: Non-reported operating income, included elsewhere in the profit and loss statement.

OUT-OF-LINE: Securities pried too-high or-too low, in like-kind comparisons.

OUT-OF-THE-MONEY: An option that has no intrinsic value. A call option is out-of-the-money when the exercise price is higher than the underlying security’s price. A put is out-of-the-money when the exercise price is lower than the underlying security’s price.

Out-of Pocket Costs: Total costs paid directly by consumers for insurance co-payment and deductibles, prescription or over-the-counter drugs, and other services.

Out-of-Pocket Expense: Cost borne directly by a patient without the benefit of health insurance or additional out-of-pocket expenses, such as deductibles or co-payments.

Out-of-Pocket LimIT: A cap placed on patient out of pocket healthcare costs, after which benefits increase to provide full coverage for the rest of the year.

Out-of-Pocket Maximum: The maximum amount of expenses, as set by a health care plan that a person is obligated to pay directly during each calendar year.

OUTFLOW: Financial disbursements.

OUTLAY: Financial disbursements.

OUTSIDE DIRECTORS: Most mutual funds registered with the SEC under the Investment Company Act of 1940 are required to have at least 40% of their Board of Directors made up of persons who are considered to be outside or “non-interested”. This means that they have no affiliation with the adviser, principal underwriter, or custodian bank.

OUTSOURCING: Make in-house or buy-elsewhere, decisions.

OUTSTANDING CHECKS: A check issued but not yet paid by the bank.

OUTSTANDING STOCK: Stock in the possession of stockholders.

OVERBOUGHT / SOLD: Security that has experienced a rapid rise in price and may be susceptible to a dramatic decline; a security that has experienced a rapid drop in price and may be susceptible to a dramatic rise.

Overdraft: Credit extension for a checking account by a banking institution. The amount by which account withdrawals exceed deposits.

Overdraft Protection: A service that allows the customer to write checks for an amount over and above the amount in their checking account. Funds are transferred from their line of credit or other designated account to their checking account as needed. This service must be applied for and approved.

OVERHANG: A large volume of securities that would depress prices if released to the markets.

OVERHEAD: Indirect corporate expenses not traced to a specific patient, client or customer.

OVERHEAT: A too rapidly expanding economy.

OVERLAPPING DEBT: The issuer’s proportionate share of the debt of other local governmental units that either overlap it (the issuer is located either wholly or partly within the geographic limits of the other units) or underlie it (the other units are located within the geographic limits of the issuer). The debt is generally apportioned based upon relative assessed values.

Overvalued: A stock whose current market price is estimated to be too high given the firm’s earnings, growth potential or other criteria; opposite of undervalued.

OVER-THE-COUNTER (OTC) MARKET: A market for securities made up of securities broker/dealers who mayor may not be members of securities exchanges. Over the counter is a market conducted anywhere other than on an exchange.

OVER-THE-COUNTER OPTIONS: Non-listed put and call options whose expiration dates and exercise prices are not standardized. OTC options are not cleared or guaranteed by the Options Clearing Corporation.

OVER-THE-COUNTER SECURITY: As thousands of companies have insufficient shares outstanding, stockholders, or earnings to warrant application for listing on the New York Stock Exchange, securities of these companies are traded in the over-the-counter market between firms who act either as agents for their customers or as principals (for themselves).

OVERLAPPING DEBT: The company or hospital issuer’s proportionate share of the debt of other local governmental units that either overlap it (the issuer is located either wholly or partly within the geographic limits of the other units) or underlie it (the other units are located within the geographic limits of the issuer). The debt is generally apportioned based upon relative assessed values.

OVERVALUE: Securities price not justified by earnings potential.

OWNER WITHDRAWLS: Money removed from a medical, healthcare practice or other business by the doctor or owners.


PAID AS BILLED: Medical invoice paid as submitted without change or adjudication.

Paid Claims Loss Ratio: Paid claims divided by total premiums.

PAID-IN-CAPITAL: Money received by a corporation from investors, for equity.

PAPER: Very short term unsecured commercial debt.

PAPER PROFIT / LOSS: An unrealized profit/loss on a security still held. Paper profits are realized only when a security is sold at prices above the cost of acquisition.

PAR: An arbitrary dollar amount assigned to a share of common stock by the corporation’s charter. At one time, it reflected the value of the original investment behind each share, but today it has little significance except for bookkeeping purposes. Many corporations do not assign a par value to new issues, assigning a stated value instead. In preferred shares or bonds, it has importance insofar as it signifies the dollar value on which the dividend or interest is figured and the amount to be repaid upon redemption.

PAR OPTION: A redemption provision that permits the issuer to call securities at par.

Par value: For common stocks, the value on the books of the corporation. It has little to do with market value or even the original price of shares at first issuance. The difference between par and the price at first issuance is carried on the books of a corporation as “paid-in capital” or “capital surplus.” Par value for preferred stocks is also liquidating value and the value on which dividends (expressed as a percentage) are paid, generally $100 per share.

Parent Company: A company that owns or otherwise controls another company or Companies.

PARTICIPATING PROVIdER: A dispenser of healthcare services or products that agrees to third party reimbursement terms and conditions in order to access (treat) a cohort of patients.

PARTICIPATIVE BUDGET: Managerial methodologies where those involve in operations provide cognitive input into the budget construction process.

PARITY: The condition that exists when a convertible security and its underlying stock are equal in value.

PARITY (OPTION): An option trading for its intrinsic value, i.e., the premium is equal to the amount the option is in-the-money. There is no time value when an option is trading at parity.

PARK: To place cash and/or asset in a safe investment haven during volatile markets.

Partial Capitation: An insurance arrangement where the payment made to a health plan is a combination of a capitated premium and payment based on actual use of services; the proportions specified for these components determine the insurance risk faced by the plan.

PARTICIPATING PREFERRED STOCK: Preferred stock that is entitled to its stated dividend and also to additional dividends on a specified basis, if declared, after payment of dividends on common stock.

Partnership: There are two basic forms of partnerships.

  • A limited partnership has two or more classes of partners. Each partner has certain rights to the partnership’s income, distributions, etc. The general partners manage the partnership and assume its potential liabilities. The limited partners are not active in the business, and their liability is essentially limited to their initial investment in the partnership. Restrictions as to sale or other disposition of the partnership units are generally placed on the limited partners.
  • A general partnership has no limited partners. All partners share the income, expenses, and liabilities in percentages agreed to by them at the time the partnership agreement is prepared. All partners are jointly liable for the partnership’s liabilities. Sale or disposition of the partnership positions may or may not be restricted.

PASSIVE: Investment in which there is no material participation; the opposite of aggressive (risky).

PASS-THROUGH ENTITY: Individual or organization who receives the profits of an S-corporation or partnership for income tax purposes.

Pay-as-you-go: The tax system employed by the U.S. government (and many states) requiring that estimated amounts of tax be paid as income is earned. Failure to make timely estimated tax payments may result in the imposition of nondeductible interest (penalties) at rates comparable to those available from commercial lenders.

PAY-IN- KIND: Preferred stock or bonds whose interest payments are made in more debt or preferred stock.

PAYABLE: Financial amount owed.

PAYABLE DATE: The date on which a dividend is paid. Payable Date; the day on which a mutual fund pays distributions to its shareholders.

PAYABLES DEFERRAL PERIOD (PDP): APs / daily credit purchases.

PAYBACK PERIOD: The time it takes for net healthcare entity revenues to return the cost of investment.

PAYEE: The person or entity receiving payment; such as a medical professional for services rendered.

PAYER: An entity that assumes the risk of paying for medical treatments. This can be an uninsured patient, a self-insured employer, a health plan, or HMO.

PAYING AGENT: The entity responsible for transmitting payments of interest and principal from an issuer of municipal securities to the security holders. The paying agent is usually a bank or trust company, but may be the treasurer or some other officer of the issuer. The paying agent may also provide other services for the issuer such as reconciliation of the securities and coupons paid, destruction of paid securities and coupons, and similar services.

Payment Cap: The maximum amount an ARM payment can increase at a payment change date regardless of the amount of increase in the interest rate. For example, a current loan payment of $1,000, with a 7.5% payment cap, may increase to no more than $1,075 on the next payment change date.

PAYMENT DATE: The date on which interest, or principal and interest, is payable on a debt security. Interest payment dates usually occur semi-annually for bonds.

PAYMENT-IN-KIND: Securities that pay interest or dividend payment in additional securities of the same kind.

PAYMENT RATE: The total payment that a hospital or community mental health center gets when they give outpatient services to Medicare patients. The total amount paid for each unit of service rendered by a health care provider, including both the amount covered by the insurer and the consumer’s cost sharing: sometimes referred to as payment level. For Medicare payments to physicians, this is the same as the allowed charge.

PAYMENT REVIEW PROGRAMS: A program used to discover medical fraud and healthcare abuse by provider and practitioners.

PAYMENT SAFEGUARDS: Activities to prevent and recover inappropriate Medicare benefit payments including MSP, Medical Review / Utilization Review, provider audits, and fraud and abuse detection.

PAYOUT RATIO: The ratio of dividends-to-earning of a company.

PAYROLL: Employee compensation or the major expense of most healthcare businesses.

PCP Capitation: A reimbursement system for healthcare providers of primary care services that receive a pre-payment every month. The payment amount is based on age, sex and plan of every member assigned to that physician for that month. Specialty capitation plans also exist but are little used.

PE RATIO: Price Earnings Ratio or price of a stock in relation to it’s per share earnings.

PEAK: A high output point relative to inputs.

PEGGING: Market manipulation using a combination of capping and supporting moves in an attempt to fix an underlying security’s price at a certain level.

Penny stocks: Stocks selling for under $1; usually highly speculative.

PENSION: Salary replacement plan for retirement; either defined benefit (DB) plan (older type, company assumes risk); or defined contribution (DC) plan (newer type: IRA, 401-k, 403-b, etc) where the participant assume risk.

PENSION BENEFIT GUARANTEE CORPORATION (PBGC): Federal corporation established following ERISA in 1974 that insures certain unfunded defined pension benefits up to certain limits.

PEOPLE PILL: The resignation of the entire senior management team in the case of a hostile corporate takeover.

PER CAPITA: Statistical allocation of data to an individual; per patient, per head; per capitus.

PER CAPITA DEBT: The amount of an issuing municipality’s debt outstanding divided by the population residing in the municipality. This is often used as an indication of the issuer’s credit position since it can be used to compare the proportion of debt borne per resident with that borne by the residents of other municipalities.

Per Capita Health Care Spending: Annual spending on health care per person.

per cause deductible: Requirement that a deductible be made for each separate illness or accident before benefits are paid. 

PERCENTAGE OF SALes: a method of estimating uncollectible receivables.

PER DIEM: Total medical reimbursement per day, rather than by actual charges and services.

Per Diem Payments: Fixed daily payments which do not vary with the level of services used by the patient. This method generally is used to pay institutional providers, such as hospitals and nursing facilities.

Per Diem Rates: Fixed daily rates which do not vary with the level of services used by the patient. This method generally is used to pay institutional providers, such as hospitals and nursing facilities.

PERFECT COMPETITION: A marketplace where there are many medical providers, healthcare services are homogenous, each healthcare business entity has a very small share of the market, no competitive threats exist, information is readily available and providers may enter and exit easily.

PERFORMANCE BUDGET: Projected performance goals, along with line item projections of inflows and outflows that measure a healthcare entities performance.

period costs: Operational costs expensed in the time period incurred.

PERIOD DIGESTION: The time after a corporate merger when company styles and culture are acclimating.

Periodic re-balancing: The act of shifting capital from asset classes that performed well to those that did not, in order to maintain a set ratio between asset classes.

PERIODIC INTERIM PAYMENT: Medical provider lump sum payment to a healthcare provider; end of year bonus adjustment.

Permanent account: Account not closed at the end of a period, such as: asses, liabilities and capital accounts.

PERPETUAL BOND: Corporate debt without a maturity date.

Perpetual inventory: A continuing running record of inventory and cost of goods sold.

PERPETUITY: An investment generating an income stream over an extended period of time.

PERQUISITE: A fringe benefit; perk.

PERSONAL HEALTHCARE CONSUMPTION: The personal use of healthcare products or services.

Personal HealthCare Expenditures: These are outlays for good and services relating directly to patient care. The part of total national or state health expenditures spent on direct health care delivery, including hospital care, physician services, dental services, home health, nursing home care, and prescription drugs.

Personal Identification Number (PIN): An account holder secret number or code to authorize transactions or obtain information regarding an account. Often used in conjunction with a plastic card (ATM or Debit card), online account access or with a telephone voice response system.

PERSONAL INCOME: Total earnings derived from wages, passive and active investments.

PETTY CASH: Small cash fund for paying minor expenditures.

PHANTOM INCOME: Income on paper but not in the form of cash.

Phantom stock plan: An arrangement under which an employee is allowed the benefits of owning employer securities even though shares are not actually issued to the employee.

PHILLIPS CURVE: Relationship between interest rates and unemployment levels.

PICK-UP: The value or profit gained in a bond swap.

PIGGYBACK: Illegal stock-broker practice of buying or selling securities after a customer does the same.

Pink sheets: Daily publication of wholesale prices of over-the-counter (OTC) stocks that are generally too small to be listed in newspapers. Named for the color of the paper used. A list issued by the National Quotation Bureau identifying market makers dealing in corporate equity securities in the over-the-counter market.

PIPELINE OR CONDUIT THEORY: A theory of investing by which tax liabilities by mutual funds are avoided by passing a certain percentage (currently 98%) of income and profits on to a fund’s stockholders as dividends and capital distributions. The fund only pays taxes on the 2% retained.

PLACE: To sell or market new securities.

PLACEMENT RATIO: The amount of bonds sold by underwriting syndicates each week as a percentage of the amount issued that week by issuers selling $1,000,000 par value or more of securities. The placement ratio is compiled weekly and is published in The Bond Buyer.

PLAYING THE MARKET: The amateurish buying or selling of securities.

PLEDGED RECEIVABLES: Use of anticipated Accounts Receivable payments as collateral.

PLEDGED REVENUES: The money obligated for the payment of debt service and other deposits required by the bond contract:

  • Gross Pledge or Gross Revenue Pledge: A pledge that all revenue received will be used for debt service prior to deductions for any costs or expenses.
  • Net pledge or Net Revenue Pledge: A pledge that all funds remaining after certain operational and maintenance costs and expenses are paid will be used for payment of debt service.

PLOW BACK: Reinvesting profits back into a business, rather than distributing it as dividends or profit to shareholders, investors or capital suppliers.

PLUS TICK: A transaction on a stock exchange at a price higher than the price of the last transaction.

PMPM: Per Member-Per Month.

PMPY: Per Member-Per Year.

POINT: In stocks, a point means $1; in bonds, since a bond is quoted as a percentage of $1,000, it means $10. In market averages, it means simply a point-a unit of measurement.

POISON PILL: Strategies to make stock less attractive in the event of a hostile corporate takeover attempt.

Pooled income fund: A mutual fund that commingles property gifted by several donors, where each donor designates a non-charitable person to receive income for life and a charity to receive the remainder interest. [Regs. §1.642(c)-5].

POOLING OF INTERESTS: Combining the financial statements of two healthcare firms that merge; the summation of assets on the balance sheet of the new or surviving firm.

PORTFOLIO: An aggregation of assets to preserve and increase purchasing power in the future. Holdings of securities by an individual or institution, which may include bonds, preferred and common stocks of various enterprises.

PORTFOLIO DISCOUNT: The discount for non-related or non-integrated healthcare business sectors or service lines.

Portfolio income: Investment income including interest income, dividend income, and net gains and losses from the sales of securities and other capital assets.

PORTFOLIO MANAGER: A professional who manages a portfolio of securities.

PORTFOLIO RISK: The sum of systematic (market risk) and non-systematic (business or industry) risk of a portfolio of securities.

Portfolio Turnover: A measure of a mutual fund’s trading activity that indicates how much buying and selling of securities has taken place.

POSITION: A stake in a certain set of securities; or financial condition of a company.

POSITION BUILDING: The gradual acquisition of certain securities to a portfolio.

Position limits: The maximum number of open option contracts that an investor can hold in one account or in a group of related accounts. Some exchanges express the limit in terms of option contracts on the same side of the market, and others express it in terms of total long or short delta.

POSITIVE CARRY: The cost of capital to finance securities is lower than the yield on those securities.

POSITIVE ECONOMICS: Healthcare or other economics testable by appeal to the facts.

POSITIVE EXTERNALITY: Benefit not reflected in price and associated with the use of healthcare or other resources.

POSITIVE YIELD CURVE: Usual graphical representation when interest rates are higher on long-term debt than they are on short-term debt.

Positively correlated: Two securities or industries that have market movement in the same direction.

POST: Recording accounting transactions.

PoST-CLOSING-tRIAL BALANCE: A list of ledger accounts.

POSTING: The transferal of amounts from the accounting journal into the ledger of accounts.

PPS Inpatient Margin: A measure that compares Prospective Payment System operating and capital payments with Medicare-allowable inpatient operating and capital costs. It is calculated by subtracting total Medicare-allowable inpatient operating and capital costs from total PPS operating and capital payments and dividing by total PPS operating and capital payments.

PPS Operating Margin: A measure that compares Prospective Payment Systems operating payments with Medicare-allowable inpatient operating costs. This measure excludes Medicare costs and payments for capital, direct medical education, organ acquisition, and other categories not included among Medicare-allowable inpatient operating costs. It is calculated by subtracting total Medicare-allowable inpatient operating costs from total PPS operating payments and dividing by total PPS operating payments.

Practice Expense: The cost of non-physician resources incurred by the physician to provide services. Examples are salaries and fringe benefits received by the physician’s employees, and the expenses associated with the purchase and use of medical equipment and supplies in the physician’s office. A component of the Medicare Resource Based Relative Value Scale (RBRVS).

Practice Expense Relative Value: A value that reflects the average amount of practice expenses incurred in performing a particular service. All values are expressed relative to the practice expenses for a reference service whose value equals one practice expense unit.

PREDATORY PRICING: Providing or selling a healthcare or other service, good or other product at below variable or incremental costs (less than profitable) in order to gain market share, or reduce competition.

PREEMPTIVE RIGHTS: The right to maintain a proportionate share of ownership in a healthcare or other corporation.

PREFERRED STOCK: Owners of this kind of stock are entitled to a fixed dividend to be paid regularly before dividends can be paid on common stock. They also exercise claims to assets, in the event of liquidation, senior to common stockholders but junior to bondholders. Preferred stockholders normally do not have a voice in management.

PRELIMINARY OFFICIAL STATEMENT (POSPECTUS) or RED HERRING: A preliminary version of the official statement which is used by an issuer or underwriters to describe the proposed issue of securities prior to the determination of the interest rate(s) and offering price(s). The preliminary official statement may be used by issuers to gauge underwriters’ interest in an issue and is often relied upon by potential purchasers in making their investment decisions. Normally, offers for the sale of or acceptance of securities are not made on the basis of the preliminary official statement, and a statement to that effect appears on the face of the document generally in red print, which gives the document its nickname, “red herring”. The preliminary official statement is technically a draft.”

PREMISE OF VALUE: The most reasonable set of circumstances applicable to a valuation project.

PREMIUM: The price of an option agreed upon by the buyer and seller through their representatives on the floor of an exchange. The premium is paid by a buyer, to a seller. The premium is quoted on a per share or per unit basis.

Premium bonds: Coupon bonds with a higher rate of interest than the prevailing rate and sell at a higher price than par. Because the yield is higher, premium bonds compensate the investor for the premium paid. Also, this type of bond has less volatility than discounted securities.

PREMIUM CALL: A redemption provision that permits the issuer to call securities at a price above par or, in the case of certain original issue discount or multiplier securities, above the compound accreted value.

PRE-PAID EXPENSE: An expense paid before due; an asset on the balance sheet.

PRE-PAID PRACTICE: Medical care reimbursement prior to the delivery of healthcare services; an accounting liability.

PREPAYMENT: Payment made before due; as in pre-paid or prospective healthcare financial arrangements by contract.

PREAYMENT PENALTY: Cost or surcharge if a debt is paid off prematurely.

Pre-refunded or advance-refunded bonds: securities which are refinanced by the proceeds of a new bond issue. Proceeds are generally invested in either U.S. government securities or federal agency securities. This type of security has an added element of security, high current income, higher yield to maturity, and lower volatility.

PRE-SALE ORDER: An order given to a syndicate manager prior to the purchase of securities from the issuer, who indicates a prospective investor’s intention to purchase the securities at a predetermined price level. Pre-sale orders are normally afforded top priority in allocation of securities from the syndicate.

PREPAID ASSEt: A benefit like rent, utilities, leases, or insurance that is paid for in advance.

Prepaid Group Practice Plan: A plan which specified health services are rendered by participating physicians to an enrolled group of persons, with a fixed periodic payment made in advance by (or on behalf of) each person or family. If a health insurance carrier is involved, a contract to pay in advance for the full range of health services to which the insured is entitled under the terms of the health insurance contract. A Health Maintenance Organization (HMO) is an example of a prepaid group practice plan.

PREPAID HEALTH PLAN: A contract between a health insurance entity and patients that agrees to provide covered medical benefits for a prepaid fixed sum.

PREPAID Hospital Service Plan: The common name for a health maintenance organization (HMO), a plan that provides comprehensive health care to its members, who pay a flat annual fee for services.

prepAid premium: An insurance or other premium payment paid prior to the due date.

PREpAiD pRESCrIPtION PLAN: Drug reimbursement plan that is paid in advance.

Prepayment: A method providing in advance for the cost of predetermined benefits for a population group, through regular periodic payments in the form of premiums, dues, or contributions including those contributions that are made to a health and welfare fund by employers on behalf of their employees.

prepayment of premiums: In insurance, payment by the insured of future premiums, through paying the present (discounted) value of the future premiums or having interest paid on the deposit.

prepayment plans: A term referring to health insurance plans that provide medical or hospital benefits in service rather than dollars, such as the plans offered by various Health Maintenance Organizations.

PREREFUNDING: A second bond issued to pay off a first bond at its call date: a form of bond payment insurance.

present value (PV): The amount of money that if invested at a specified rate of interest, will, at a given future time accumulate to a specified sum, calculated by: PV = Future Value X Present Value Factor.

Present Value Factor (PVF): The discounting of future cash flow, such as ARs by the formula: [1/1+i)n].

PRESENT VALUE ANNUITY: The worth today, for an equal value of streaming income, considering the time-value-of-money.

PRESOLD ISSUE: Municipal securities sold prior to public announcement.

PREVENTION COSTS: Costs incurred to prevent or reduce poor quality medical gods or services.

PRICE: Revenue posted per healthcare product, good or service unit rendered; charge.

PRICE CEILINGS: Legal maximum charges for health products or services resulting in a shortage.

PRICE DISCRIMINATION: The practice of selling certain healthcare services or products for different prices, to different buyers.

Price / earnings ratio (P/E ratio): Often called a stock’s “multiple.” Current price per share divided by earnings per share. Earnings can be “forward” (predicted) or “trailing” (actual last four quarters).

PRICE ELASTICITY OF DEMAND: The percentage change in quantity demanded of a healthcare good resulting from each one percent change in the price of the service.

PRICE ELASTICITY OF SUPPLY: The percentage change in quantity supplied of a healthcare good resulting from each one percent change in the price of the service.

PRICE FLOOR: Legal minimum charges for healthcare or other services resulting in a glut for market flood.

PRICE INDEX: A measurement of healthcare product or service value, set at 100 in the base year.

PRICE LEADER: A dominant company in the healthcare industry that sets its price to maximize profits, after which other firms follow suit at the same price level.

PRICE SUPPORTS: Floors imposed on certain goods or services.

PRICE SYSTEM: Model by which healthcare resource use is guided by their price.

PRICE VARIANCE: A measure, benchmark or spread of standardized costs for an industry.

PRICE WAR: The continual erosion of prices by rival companies in the same marketplace or space; such as ambulatory surgery centers (ASCs).

PRICER OR REPRICER: A person, an organization, or a software package that reviews procedures, diagnoses, fee schedules, and other data and determines the eligible amount for a given health care service or supply. Additional criteria can then be applied to determine the actual allowance, or payment, amount.

PRICEY: An unusually high or low bid for securities.

PRIMARY DISTRIBUTION (OFFERING): The original sale of a security; all further trades are in the secondary market.

PRIMARY PAYER: The insurer who pays the first medical claim. Medicare or other private Health insurance.

PRIME COSTS: The sum of direct material and labor costs.

PRIME MARKET: Market for new issue securities; Initial Public Offering’s.

PRIME PAPER: High quality commercial paper; short-term unsecured corporate debt.

PRIME RATE: The cost of capital or interest rate a bank charges its most credit worth customer or institutions.

PRINCIPAL: The role of a broker/dealer firm when it buys and sells for its own account. In a typical transaction, it buys from a market-maker or contra broker and sells to a customer at a fair and reasonable markup; if it buys from a customer and sells to the market-maker at a higher price, it is called a mark-down. OR, the sum amount of money invested.

PRINCIPAL REGISTRATION: A form of registration with the National Association of Securities Dealers, entitling the registrant to participate in all supervisory phases of the member organization except preparation and approval of the financial statements and net capital computations.

Prior Deductible Credit: A provision that allows a member or family to apply any health insurance deductible credit.

PRIOR PERIOD ADUSTMENT: A correction to retained earnings for a mistake of a prior accounting period.

PRIOR PREFERRED (PREFERENCE) STOCK: A kind of preferred stock entitling the owner to prior claim to forthcoming dividends or claim to assets in liquidation proceedings.

PRIORITY: Order of creditors in a liquidation action (secured to unsecured).

PRIORITY PROVISIONS: The rules adopted by an underwriting syndicate specifying the priority to be given different types of orders received by the syndicate. The most common priority provision gives pre-sale orders top priority, followed by group net orders, designated orders, and member orders. MSRB rules require syndicates to adopt priority provisions in writing, and to make them available to all interested parties.

PRIVATE COSTS: Price paid by individuals for use of a good or service such as healthcare.

Private Expenditures: These are outlays for medical services provided or paid for by nongovernmental sources: consumers, insurance companies, private industry, and philanthropic and other non-patient care sources.

Private foundation: A tax-exempt organization, such as a hospital or other designated healthcare entity, under IRC §501(c)(3) that does not enjoy a broad base of public support. [IRC §§508, 509].

PRIVATE INUREMENT: The payment for medical goods, services and equipment, at above market rates, at the expenses of tax-exempt healthcare entities (501 [c] 3 charitable or community healthcare facilities and hospitals).

PRIVATE PLACEMENT: The distribution of unregistered securities to a limited number of purchasers without the filing of a registration statement with the SEC. Such offerings generally require submission of an investment letter to the seller by all purchasers.

PRIVATE SECURITIES TRANSACTIONS: The practice described in the National Association of Securities Dealers (NASD) Rules of Fair Practice, under which an associated person of a member firm engages in a securities related transaction without his firm’s knowledge. This is prohibited. An associated person is required to inform his firm of any securities type activity and must have its permission in order to engage in same. If the associated person is to receive compensation for this transaction, the firm is required to run it through its books and records and has ultimate supervisory responsibility.

PRIVATIZATION: The conversion of a public company into a privately held one; usually through a leveraged buy-out with extreme debt.

Probability distribution: A statistical tool used to show the dispersion around an expected result.

PROCEEDS SALE: A transaction whereby a customer sells a security and uses the proceeds to purchase another security.

PRODUCER PRICE INDEX (PPI): Monthly measure wholesale price changes in industry segments.

PRODUCTION: The conversion of healthcare or other inputs, to outputs.

PRODUCT MARGIN: Total contribution margin minus avoidable fixed costs.

PRODUCTION COST: The operations expenditures of a processing department.

PRODUCTION COST REPORT: Summarize the operations of a processing department for a specific period.

PRODUCTIVE: The amount of healthcare economic output, per unit of input.

PRODUCTIVE EFFICIENCY: Occurs when the maximum output of healthcare gods and services is derived from the output of other goods or services.

PRODUCTION FUNCTION: The most number of healthcare outputs that a healthcare entity can produce or serve from various quantities of inputs.

PRODUCTIVITY: A measure of healthcare work output per unit of input.

PROFIT: The difference between revenues taken in by a healthcare or other business entity and the costs incurred for operations and the receipt of those revenues.


PROFIT CENTER: Healthcare organizational units responsible for earning revenues and controlling their own costs; such as the emergency room or a cardiac care center. Healthcare entities these include traditional, capitation and administrative subunit profit centers.

PROFIT MARGIN ON SALES (PMOS): Net income to share (stock) holders / Sales

PROFIT TAKING: To sell appreciated securities for gain and/or profit.

PROFITABILITY RATIOS: A financial success measurement of a healthcare or other organization (i.e., Return on Assets, Return on Equity, Return on Investment, etc).

PRO-FORMA FINANCIAL STATEMENTS: Estimates or projections of the four consolidated financial statements: Balance Sheet, Cash Flow Statement, Net Income Statement and Statement of Operations.

PROGRAMMED TRADING: Integrated sales or purchase of securities trigged by computers.

PROGRESSIVE TAX: A tax rate that increases with the tax base.

PROJECT COMPLETION CLAUSE: A protective covenant found in many municipal and hospital revenue bonds. The contractor(s) building the revenue producing project have an obligation to complete their work (and have the facility ready to produce revenue by a certain, specified date. If the facility is not completed as scheduled, the issuer is entitled to collect a monetary penalty from the contractor. The contractor protects himself by purchasing a project completion bond from a casualty insurance company.

PROJECTED COSTS: Claims and/or retention costs projected for a given patient population for a specific time period.

projection: Economic estimate of future financial or business performance in a particular sector like healthcare, or the nation as a whole.

promise to pay: As specified in a policy or contract, a company’s stated agreement to make payment of all stipulated sums to designated beneficiaries in the event of certain, specified occurrences.

Promissory note: Written promise to pay back a sum of money over specific time period and noted interest rate.

PROPORTIONATE SHARE OF ASSETS IN LIQUIDATION: A common stockholder’s right to assets in proportion to his interest, upon liquidation, after all liabilities have been satisfied.

PROPORTIONATE TAX: A fixed tax rate in the face of a variable tax base.

PROPRIETORSHIP: A medical practice or healthcare entity owned and operated by a single individual or doctor.

pro-rata: According to a calculated share or portion; in proportion.

pro-rata cancellation: The termination of a health insurance or other contract or bond, with the premium charge being adjusted in proportion to the exact time the protection has been in force. When the policy is terminated midterm by the insurance company, the earned premium is calculated only for the period coverage was provided. For example: an annual policy with premium of $1,000 is cancelled after 40 days of coverage at the company’s election. The earned premium would be calculated as follows: 39/365 days X $1,000= .10 X $1,000=$106.

pro-rata premium: A fractional premium.

pro-rata rate: A short-term rate proportionate to the rate for a longer term.

pro-rata unearned premium reserve: A health insurance reserve calculated to represent the unearned portion of the liability to policy owners to be discharged in the future with future protection, by return to the policy owner in event of cancellation, or by reinsuring the business with another insurer.

PRORATE: Adjustment of healthcare or other policy benefits for any reason of change in occupation or significant or existence of other coverage.

PRORATION: Percentage formula allocation of assets.

PROSPECTIVE PAYMENT: The payment in advance for medical services rendered.

PROSPECTIVE PAYMENT SYSTEM (PPS): A system used by Medicare to pay medical providers, hospitals, and clinics a set amount of money per diagnostic related group (DRG).

PROSPECTUS: A document stating material information for an impending offering of securities (containing most of the information included in the registration statement) that is used for solicitation purposes by the issuer and underwriters.

PROTECTIVE COVENANTS: Agreements in the bond contract which impose duties upon the issuer, in order to protect the interests of the bondholders. Typical protective covenants relate to such items as maintenance of rates adequate to cover debt service, segregation of funds, proper project maintenance, and insurance, maintenance of specified books and records, and tests for the issuance of additional parity bonds.

PROVISION FOR BAD DEBTS: A healthcare entity operations account that estimates the portion of write-offs, non-payments and bad debts expenses in a cumulative account on the balance sheet.

PROXY: A short-term voting authorization issued by a corporation to its stockholders.

PROXY FIGHT: The persuasion and arguments used by a takeover artist to convince corporate shareholders to sell stock, with or without a premium or discount.

PRUDENT BUYER: The efficient purchaser of market balance between value and cost.

PRUDENT MAN RULE: Most states have adopted this rule, named after a court case decided in 1830, which provides that a person acting in a fiduciary capacity (a trustee, executor, custodian, etc) is required to conduct himself faithfully and exercise sound judgment when investing monies under his care. “He is to observe how men of prudence, discretion and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent distribution of their funds, considering the probable income as well as the probable safety of the capital to be invested.” In most cases, this rule allows for investments into mutual funds and variable annuities.

PRUDENT INVESTOR RULE: Rule suggesting that one in a fiduciary capacity (a trustee, executor, custodian, etc) is required to conduct himself faithfully and exercise sound judgment when investing monies under his care and taking measured and reasonable investment risks in return for the anticipation of future rewards. Allows for investments into mutual funds, stocks, bonds and variable annuities; and believes in asset allocation and Modern Portfolio Theory (MPT).

Public Charity: A tax-exempt organization, such as a hospital, clinic or other designated entity, under IRC §501(c)(3) that enjoys a broad base of public support. [IRC §509(a)(2)]

PUBLIC OFFERING: Securities sold to the public through an underwriter or investment bank.

PUBLIC OFFERING PRICE: Shares priced at the initial public offering (IPO).

PUBLICLY HELD: Company whose shares are traded and held by public investors.

PULL BACK: Retreat in an upward securities price trend.

PURCHASE ACOUNT: A listing of all purchases.

PURCHASE JOURNAL: Journal used to record all purchases of DME, inventory and related items.

PURCHASE ORDER: Ticker or invoice authorization to buy an asset.

PURCHASER’S REPRESENTATIVE: Under Rule 506 of Reg. D, a purchaser’s representative is required for any non-accredited investor who does not have sufficient knowledge or experience to personally analyze the risks and merits of an investment.

PURCHASING POWER RISK: Potential of inflation to erode purchasing power or value of future income and assets.

PURE INFLATION: Occurs when the price of all goods and services rise over time period.

PURE MONOPOLY: Environment where there is a single seller of a healthcare product or service without and alternate and without similar substitutes.

PURE MONOPSONY: Environment where a single company buys the entire market supply of a healthcare input, with few alternative employment opportunities.

PURE PLAY: A single line of business; especially in a company or firm without diversified products, goods or services. (i.e., an MRI imaging center).

Put bonds: Put bonds allow bondholders to give bonds (put) back to the issuer at par on specified dates prior to maturity. Put bonds have either a fixed or variable interest rate and may have single or multiple tender dates. They can also be either mandatory (in which case the investor has a specified period of time to keep the bonds at the new rate) or optional (in which case the investor has a specified time period to tender the bonds).

PUT OPTION: An instrument that grants the holder the right to sell a stated number of shares (typically 100) of the underlying security within a stated period of time at the exercise price.

PUT WRITER: One who receives a financial premium and accepts for a time period, the obligation to buy an underlying security for a specific price at the put buyer’s discretion.

Pyramiding: Credit abuse of a loan taken for recurring purposes and not fully paid when needed again for a new loan. 

Q-T: Terminology


Q RATIO: Ratio of a healthcare or other firm’s market assets value to their replacement cost.

QUI-TAM: The method in the Federal False Claims Act which allows lawsuits against the healthcare fraud and abuse wrongdoers, in “the name of the king, as for himself, who sues in this matter.” (Latin phrase).

QUALIFIED ANNUITY: An annuity which qualifies for tax deductibility under the IRS code. These annuities will be funded with pre-tax dollars and the earnings received into the account will accrue tax deferred. When the annuitant begins payout, the entire distribution, whether in monthly installments or in a lump sum, will be taxed as ordinary income. Examples of these annuities would be 4O3(b) plans, for public education employees, doctors, nurses, hospitals, clinics and 501(c)(3) plans, for private non-profit organizations.

Qualified appreciated stock: Stock for which a market price quotation is readily available and that would generate a capital gain if sold. [IRC §170(e)(5)]

Qualified charity: An organization described in IRC §170(c) which includes hospitals and healthcare organizations. Gifts to these entities can be deducted by donors for income, gift, or estate tax purposes.

QUALIFIED DEFERRED COMPENSATION PLAN: Pension plan contributions that are deducible to an employer and have no current tax implications for employees, according to IRS code; especially for hospital and healthcare personnel.

QUALIFIED LEGAL OPINION: Conditional affirmation of the legality of financial securities, before or after they are sold. An unqualified or “clean” legal opinion, on the other hand, is an unconditional affirmation of the legality of securities.

QUALIFIED MEDICAL EXPENSE: Defined by IRS Code 213(d) as an expense used to alleviate or prevent a mental defect, illnesses or physical defects.

QUALIFIED OPINION: An authors opinion that appears on financial statements that calls attention to exceptional items of interest.

Qualified plan: A deferred compensation plan (DCP) that receives favorable tax benefits but is subject to the extensive regulatory requirements of the Internal Revenue Code (IRC) and the Employee Retirement Income Security Act (ERISA).

QUALIFIED RETIREMENT PLAN: A private retirement plan that meets the rules and regulations of the Internal Revenue Service. Contributions to a qualified retirement plan are, in almost all cases, tax deductible and earnings on such contributions are always tax sheltered until retirement. A 401(k) plan, 403 (b) plan or Keogh plan that allow individuals to contribute both pre- and after-tax money for a tax-deferred investment. These plans are usually funded by contributions from employee wages, which may be enhanced by employer contributions.

Qualifying Ratios: Comparisons of a borrower’s debts and gross monthly income.

QUANTISE: To denominate a liability or asset in a non-regular (Non-USD) currency trade.

Quantitative analysis: Financial analysis, based on measurable mathematical actualities that ignore considerations of quality of management. Advanced quantitative analysis has produced historical measures of equity volatility relative to their own past history and the market’s.

quantity demanded: The amount of healthcare products or services a patient-buyer is willing to able to purchase, at a certain price, over time.

QUANTITY DISCOUNT: Price reductions for goods or services according to volume.

quantity SUPPLIED: The amount of healthcare products or services a medical provider or supplier is willing to make or provide at a certain price, over time.

QUANTO OPTION: An option that pays-out in an interest or current rate, in a denomination other than issued.

QUARTERLY REPORT: A report of securities performance sent every three-months to stockholders.

QUBES (QQQQ): NASD technology laden tracking exchange traded fund (ETF) index on the American Stock Exchange (Amex).

quick assets: Cash or those assets that can quickly be converted into cash.

quick asset ratio: The ratio of cash, accounts receivable and marketable securities to current liabilities.

QUICK RATIO: A measure of healthcare entity financial liquidity: (cash+marketable securities+ARs/current liabilities); Acid Test.

QUICK TURN: A security traded quickly; as in a day trade.

Quid pro quo: The expectation by a donor that he or she will receive a bargained-for benefit in exchange for a gift to a charity. [Rev. Rul. 76-185]

QUOTA: An imposed limit on the amount of inputs or outputs.

Quote: Current buy and sell prices of a security. The lowest price any seller will accept at a given time is “asked,” and the highest price any buyer has offered for a stock at a given time is the “bid.” The difference between bid and asked is the “spread.”


R-SQUARED: Mutual fund performance percentage explained by variations in its compared benchmark index.

Rabbi trust: An arrangement used to provide informal funding for a nonqualified deferred compensation agreement. Assets of the trust must be forfeitable by the employee who is a party to the agreement. Generally, this is achieved by making the trust assets subject to claims by the employer’s creditors.

RACKETEER INFLUENCED AND CORRUPT ORGANIZATION ACT (RICO): Federal legislation used against individual accused of insider trading activities.

RAIDER: One who buys controlling stock in a company and instills new senior management.

RALLY: A rise in a stock market or individual security.

Random-walk theory: A direct refutation of technical analysis which posits that financial markets cannot be predicted because they move in a random manner like the walking pattern of an inebriated person.

RANGE: A set of data or securities prices consisting of the opening sale, high sale, low sale, and the last sale of the day for a given security.

RATE OF RETURN: The percentage amount of income, loss or change in value anticipated or realized on an investment, over time.

RCC: RATIO OF CHARGES TO CHARGES (COSTS TO CHARGES): Percentage ratio of initial patient charges, to total patient charges, OR, percentage ratio of total patient costs to total patient charges.

RCCAC (RATIO OF CHARGE TO CHARGES (OR COSTS TO CHARGES) applied to costs (CHARGES):  Retrospective medical payment formula that multiples RCC by allowable costs, or by patient charges.

RATIONING; HEALTHCARE: Artificial constraints on either the demand side or the supply side of the free healthcare marketplace.

RATINGS: Evaluations of the credit quality of notes and bonds usually made by independent rating services. Ratings are intended to measure the probability of the timely repayment of principal of and interest on debt securities. Ratings are initially made before issuance and are periodically reviewed and may be amended to reflect changes in the issuer’s credit position. The information required by the rating agencies varies with each issue, but generally includes information regarding the issuer’s demographics, debt burden, economic base, finances and management structure. Many financial institutions also assign their own individual ratings to securities.

RATIO ANALYSIS: A method of analyzing a healthcare or other entities’ financial condition calculated from line items in the financial statements. There are four major categories:

  • Liquidity;
  • Profitability;
  • Capitalization;
  • Activity.

RATIONAL BEHAVIOR: Actions, especially economic and financial, that seek to achieve a gain by undertaking and understanding the psychological processes for which the extra benefit exceeds the extra cost.

RATIONAL EXPECTATIONS: The use of all available information to produce an economic forecast.

RBRVS: Resource Based Relative Value Scale.

REACTION: A precipitous drop in securities prices after a long rising bull market.

READY TRANSFERABILITY OF SHARES: A shareholder’s right to give away or sell shares without prior consultation with corporate directors.

REAL: Expressed in constant dollars; inflation adjusted.

REAL ASSET: Tangible, fixed asset.

REAL ESTATE INVESTMENT TRUST (REIT): A company that manages a portfolio of real estate holdings for capital appreciation, income, or both; type of mutual fund.

REAL GNP: Gross National Product calculated from a base, nominal or reference year.

REAL GROWTH: Increased demand or supply for healthcare or other goods or services, with corresponding unit (not price) increase.

REAL INCOME: Income purchasing calculated from a base, nominal or reference year.

Real return: The actual rate of investment return after factors such as inflation, commissions, fees and expenses, and taxes are taken into consideration.

Real Value: A measurement of economic amount corrected for changes in price over time (inflation), or expressing a value in terms of constant prices.

REAL WAGES: Constant nominal wages adjusted for inflation and purchasing power loss.

REALIZED GAINS OR LOSS: The increase or decrease in securities value, from the time of purchase, to sale.

Reasonable and Customary Charge: The medical or healthcare charges or fees common within a geographic area. These fees are reasonable if they are within the average charge for service parameters for that area, and if the charges for participating providers are what have been contracted with the health plan.

reasonable charges: Under Medicare or a major medical health insurance policy, the customary charges for similar services made by physicians. The range of prevailing charges for physicians engaged in specialty practices may be different from one locale to another.

REBALANCE: To sell or buy securities in a portfolio in order to return to prescribed set allocation or proportional constraints.

rebate: A controversial health or other insurance practice where a portion of an agent’s commission or anything of value is given to the prospective patient or insured as an inducement to buy. Rebates are illegal in most states.

rebating: Granting any form of inducement, favor, or advantage to the purchaser of a health insurance or other policy, good or service that is not available to all under the standard policy terms. Rebating in some states is a penal offense for which both the agent and the person accepting the rebate can be punished by fine or imprisonment, and in virtually all states the agent is subject to revocation of license.

REBILL: To bill again for non-covered or non-paid services.

RECAPITALIZATION: An alteration or change in a healthcare or other firm’s sources of finance.

receipt: A written acknowledgment of a payment.

Receipts of accrual on municipal securities: Receipts of Accrual on Municipal Securities (RAMS) are stripped municipals. Similar to government CATS, RAMS have the added tax-exempt feature common to municipal securities. RAMS come in three types: coupon RAMS represent the claim to future coupon interest; corpus RAMS are claims to the principal, due either at maturity or upon the date the bond is refunded; converting RAMS have the coupons stripped up to the call date, and then the certificates convert to a tax-free interest-bearing security at the underlying bond’s coupon rate.

RECEIVABLES: Monetary claims against a business entity or individual; ADS /  DSO.

RECEIVABLES COLLECTION PERIOD (RCP): Receivables / Sales/360; DSO (Days Sales Outstanding)

RECEIVABLES TURNOVER: Speed of accounts receivable (AR) collections.

RECEIVER IN BANKRUPTCY: An impartial, court-appointed administrator of a corporation that has sought protection from its creditors’ claims under federal bankruptcy laws. He is appointed to help the court decide between liquidation and reorganization and is paid out of the remaining assets of the corporation.

RECESSION: A decline in real GNP for two consecutive, three month reporting periods.

RECLAMATION: If good securities delivery is not made between broker/dealers and such is determined after physical delivery was made, either party (buyer or seller) may commence reclamation procedures.

Re-conveyance:  A method of releasing a lien against real property.

RECORD DATE: The date set by the corporate board of directors for the transfer agent and registrar to close their financial books to further changes in registration of stock and identify the recipients of the distribution.

RECOVERY: Economic expansion after a period of contraction.

RECOUPMENT: The recovery by Medicare of any Medicare debt by reducing present or future Medicare payments and applying the amount withheld to the indebtedness.

RECOURSE: The legal ability to hold the original creditor responsible in a failed financial deal; to recover a debt.

RECOURSE FINANCING: Loans for which partners have personal liability, such as a medical practice partnership; the value of such loans is part of a partners’ basis in a partnership, OR, the ability to return assets for full or partial pre-arranged value.

Recurring expenses: Regular healthcare or other entity operating expenditures that occur every month.

REDEMPTION: Return of investment principle in a security transaction.

REDEMPTION FEE: A premium charge for a redemption.

Reduction rules: Exceptions to the general rule that gifts to a qualified hospital or charity are deductible to the extent of the fair market value of the donated property. [IRC §170(e)(1)(A)]

REFLATION: The reverse of deflation through government Federal Open Market Committee (FOMC) interaction.

Refunding: The act of issuing new debt and using prior proceeds from old debt to retire existing debt.

RED HERRING: A preliminary prospectus for securities to be offered publicly by a corporation or underwriter. It is the only form of written communication allowed between a broker/dealer and a potential purchaser before the effective date. The Securities Act of 1933 requires a red-lettered caveat on the front page, hence the derivation of the name.

REDEMPTION: A transaction in which one issuer returns the principal amount represented by an outstanding security (plus, in certain cases, an additional amount).

REDEMPTION PRICE: The amount per share a mutual fund shareholder receives when he cashes in his shares (also known as “bid price”). The value of the shares depends upon the market value of the fund’s portfolio securities at the time.

REDEMPTION PROVISIONS: The terms of a bond contract giving the issuer the right or requiring the issuer to redeem or “call” all or a portion of an outstanding issue of bonds prior to their stated dates of maturity at a specified price, usually at or above par. Common types of redemption provisions include:

  • Optional Redemption: The issuer has the right to redeem bonds, usually after a stated date and at a premium, but is not required to do so.
  • Mandatory Redemption: The issuer is required to call outstanding bonds based on a predetermined schedule or as otherwise provided in the bond contract. Frequently, the issuer is allowed to make open market purchases in lieu of calling the bonds.
  • Extraordinary Mandatory Redemption: The issuer is required to call or redeem all or part of an issue of bonds upon the occurrence of certain events.

REFUNDING (REFINANCING): The issuance of a new debt security (bond) using the proceeds to redeem old bonds at maturity or outstanding bonds issued under less favorable terms and conditions to replace one debt with another, as interest rates have declined.

REGIONAL EXCHANGE: The stock exchange of a particular region of the country.

REGISTERED BONDS: Outstanding bonds whose names are recorded on the bonds by the issuing healthcare or other corporation. Legal title may be transferred only when endorsed by the registered owner.

REGISTERED CHECK: A bank issued check guaranteed by bank funds.

REGISTERED REPRESENTATIVE: A broker who sells and buys securities for a customer; a securities salesman.

REGISTERED COMPANY: Securities Exchange Commission mandated disclosure prior to an initial public offering (IPO).

REGISTERED INVESTMENT ADVISOR (RIA): One who is registered with the Securities Exchange Commission (SEC) to sell financial products.

REGISTERED REPRESENTITIVE: A stock-broker and/or account sales executive for a brokerage company, and/or broker-dealer member who receives commissions.

REGISTERED SECONDARY DISTRIBUTIONS: Offering of securities by affiliated persons (insiders) or the issuer (of treasury stock) that require an effective registration statement on file with the SEC before distribution may be attempted.

REGISTRAR: Usually a trust company or bank charged with the responsibility of preventing the issuance of more stock than authorized by the company.

REGISTRATION: The process of filing with the SEC in order to sell securities to the public.

REGISTRATION STATEMENT: A document filed with the SEC by the issuer of securities before a public offering may be attempted. The Securities Act of 1933 mandates that it contain all material information. Such a statement is required also of affiliated person’s intent upon offering sizable amounts of securities in the secondary market. The SEC examines the statement for a twenty-day period (minimum), seeking obvious omissions or misrepresentations of fact, but specifically does not approve the issue.

Regression analysis: A statistical tool used to measure the relationship between two or more variables, prices or data points.

REGRESSIVE TAX: A tax rate that declines as the tax base increases.

REGULAR WAY CONTRACT: The most frequently used securities delivery contract. For stock and corporate and municipal bonds, this type of contract calls for delivery on the first business day after the trade. For U. S. government bonds and listed options, delivery must be made on the next business day after the trade.

REGULATED INVESTMENT COMPANIES: Investment companies that meet certain criteria for eligibility and are exempted by the IRS from paying taxes on investment income and capital gains paid to shareholders as long as at least 98% is distributed.

REGULATION A: An exemption from standard SEC registration for a security, the total offering price of which does not exceed $5,000,000 in a 12 month period.

REGULATION D: The part of the Securities Act of 1933 that deals with private securities placements. The major provisions deal with accredited investors and both dollar limits (aggregation) and investor limits (integration). Under this regulation, private placements meeting the stipulations are exempt from registration with the SEC.

REGULATION G: Federal Reserve Bank (FRB) rules for those lenders who extend credit to purchase or carry securities.

REGULATION Q: Federal Reserve Bank (FRB) ceiling ruling for pass-book and checking account interest rates.

REGULATION T: Federal Reserve Bank (FRB) regulation that explains the conduct and operation of general and cash accounts within the offices of a securities broker/dealer firm, prescribing a code of conduct for the effective use and supervision of credit. According to Regulation T, one may borrow up to 50% of the purchase price of securities that can be purchased on margin. This is known as the initial margin. Also, it dictates that payment must be received no later than 1-business day after the trade and what happens if you do not pay on time.
REGULATION U: Federal Reserve Bank (FRB) regulation that directs banks to secure a statement of purpose signed by a borrower who uses securities as collateral in order to determine the reason for the loan.

REGULATION Z: Federal Reserve Bank (FRB) regulation covering Truth in Lending (TIL) and Consumer Credit Protection Act (CCPA) of 1968.

REHYPOTHECATION: Stocker-Broker-Dealer pledge of securities in a margin account as collateral for a loan.

REIMBURSEMENT: Repaying out-of-pocket expenses.

REINVESTMENT PRIVILEGE: A service provided by most mutual funds for the automatic reinvestment of a shareholder’s income dividends and capital gains distributions in additional shares.

REINVESTMENT RISK: The risk that a purchaser of a fixed income security incurs that interest rates will be lower when the purchaser seeks to reinvest income received from the security.

REJECTION: The privilege of the purchaser in a transaction to refuse a delivery not deemed, good.

RELATED PORTFOLIO: A portfolio of municipal securities that is operated in some way with a municipal securities dealer (e.g., a dealer bank’s portfolio). Certain disclosure requirements under Municipal Securities Rulemaking Board (MSRB) rules are applicable to orders for new issue municipal securities from related portfolios.

Relative efficiency: The belief that the markets reflect current information in its securities prices. 

RELATIVE VALUE SCALE (RVS): A compiled table of relative value units (RVUs), which is given to each medical procedure or unit of healthcare service. As payment systems, RVS is used to determine a formula that multiplies the RVU by a dollar amount, called a converter.

Relative Value Unit (RVU): The unit of measure for a relative value scale. RVUs must be multiplied by a dollar conversion factor to become payment amounts.

RELEVANT INFORMATION: Expected information that differs among alternative courses of action.

RELEVANT RANGE: Span where total fixed costs and variable costs per unit, remain stable and do not change.

Remainder interests: Property, financial or other rights that can be enjoyed only after prior rights have terminated.

REMARGIN: The addition of eligible securities or cash for a brokerage account deficiency.

Remittance: Payment of an invoice.

RENEWAL AND REPLACEMENT FUND: A fund established by the bond contract of a revenue bond issue into which moneys are deposited to cover anticipated expenses for major repairs of the project or its equipment or for replacement of equipment. Under a typical revenue pledge, this fund is the fifth to be funded out of the revenue fund.

REOFFERING SCALE: The prices and/or yields listed by maturity for securities offered to the public by underwriters.

REORDER pOINT: A preset quantity limit to order additional DME or inventory, so as to avoid stock-outs.

REORGANIZATION: The restatement of assets to reflect current market value, whereby a financially troubled healthcare firm may continue operations, as opposed to liquidation where assets are sold and the entity no longer exists.

Replacement cost: Charge to replace a similar or like-kind asset at current replacement prices. The present cost of similar property or equipment with the closet utility to the replaced item.

REPORT DATE: The final date that economic, accounting and/or financial conclusions are relayed to the patient, customer or client.

REPRESENTATIVE REGISTRATION: The minimum NASD qualification for solicitors of investment banking or securities business, traders, assistant officers of member firms, and training directors and assistants.

REPURCHASE AGREEMENT: Repurchase agreements (repos) are the primary tool used by dealers in Government (sometimes municipal) securities to finance the carrying of inventory. Simply stated, it is an agreement between the buyer (the dealer) and seller (the issuer) to reverse a trade at a specified time at a specified yield.

REQUIRED RATE OF RETURN: The lowest acceptable rate of return required from investors for a given level of risk.

REQUISITION: A formal written order for assets.

Reserves: Monies earmarked by health plans to cover anticipated claims and operating expenses A fiscal method of withholding a certain percentage of premium to provide a fund for committed but undelivered health care and such uncertainties as: longer hospital utilization levels than expected, over-utilization of referrals, accidental catastrophes, etc. A percentage of the premiums support this fund. Businesses other than health plans also manage reserves. For example, hospitals document reserves as that portion of the ARs they hope to collect but have some doubt about collect-ability. Rather than book these amounts as income, hospitals will “reserve” these amounts until paid.

Reserves: (a) A fiscal method of withholding a certain percentage of premiums to provide a fund for committed but undelivered health care and such uncertainties as: longer hospital utilization levels than expected, over-utilization of referrals, accidental catastrophes and the like. (b) The fiscal method of providing a fund for committed but undelivered health services or other financial liabilities. A percentage of the premiums support this fund.

RESERVES REQUIREMENT: The money a banking institution must hold against deposit liabilities.

RESET BOND: A bond debt whose coupon interest rate payments are periodically reset.

RESIDUAL VALUE: Remaining value at the end of a time period within a discounting future earnings valuation model.

Resource-Based Relative Value Scale (RBRVS): A schedule of values assigned to health care services which give weight to medical procedures based upon resources needed by the provider to effectively deliver the service or perform that procedure. Unlike other relative value scales, RBRVS ignores historical charges and includes factors such as time, effort, technical skill, practice cost, and training cost. Established as part of the Omnibus Reconciliation Act of 1989, Medicare payment rules for physician services were altered by establishing an RBRVS fee schedule. This payment methodology has three components: a relative value for each procedure, a geographic adjustment factor, and a dollar conversion factor. This payment methodology has three components: a relative value for each procedure, a geographic adjustment factor, and a dollar conversion factor. A Medicare weighting system to assign units of value to each CPT code (procedure) performed by physicians and other providers.

RESPONSIBILITY ACCOUNTING: The evaluation of each individual accountability center of a healthcare or other organization.

RESTRICTED ACCOUNT: A margin-securities brokerage-account, where the equity is less than the current federal requirement (Regulation T).

RESTRICTED ASSETS: Resources limited by legal or contractual agreements.

RESTRICTED COVENANT: A formal written non-compete order.

RESTRICTED DONATIONS: Donated funds with restrictions on use.

RESTRICTED SECURITY: A portfolio security not available to the public at large, which requires registration with the Securities and Exchange Commission before it may be sold publicly; a “private placement” frequently referred to as a “letter stock”.

RESTRUCTURE: To adapt corporate financial, business, marketing o other strategies to better compete in changing markets.

RETAIL: One who buys securities for a personal account; usually in small quantities. RETAIL PRICE: Price for financial products and services charged to individuals without benefit of discounted price breaks.

RETAINED EARNINGS: Profits that a healthcare business entity keeps to further its mission statement, goals and objections. That part of a company’s profits that is not paid out in dividends but used by the company to reinvest in the business.

retainer: An ongoing fee paid to a professional person to engage his or her services.

RETENTION DEDUCTIBLE: A health or other insurance clause that stipulates in the absence of underlying coverage, a deductible will apply.

RETENTION REQUIREMENT: The amount of money necessary to be retained in an account after sale of a security, presently 50 percent of the proceeds of the sale. This is only used in a restricted margin account.

RETIREMENT PROTECTION ACT (RPA): 1994 Legislation to strengthen the Pension Benefit Guarantee Corporation (PBGC) and assist under or over funded legacy company defined benefit plans (DBPs) such as seen in older hospital, VA and other healthcare systems.

RETROSPECTIVE PAYMENT: Healthcare care reimbursement determined after the medical care has been rendered.

RETOSPECTIVE PREMIUM: An insurance premium establishing method in which current costs are adjusted to reflect the prior year’s loss or health claim experience.

RETOSPECTIVE RATE: An insurance rating method in which current rates are adjusted to reflect the prior year’s aggregate or individual rating experience.

Retrospective Rate Derivation (RETRO): A rating system whereby the employer becomes responsible for a portion of the group’s health care costs. If health care costs are less than the portion the employer agrees to assume, the insurance company may be required to refund a portion of the premium.

RETROSPECTIVE REIMBURSEMENT: The payment to a healthcare provider or entity prior to the deliverance of medical services.

RETURN: Income, interest and/or capital gains earned on an asset.

RETURN OF DEBT: Principal payments.

RETURN OF EQUITY: Liquidating dividends.

RETURN ON ASSETS (ROA): Net income expressed as an average of total assets.

RETURN ON DEBT (ROD): Interest or usury payments.

RETURN ON EQUITY (ROE): Net income expressed as a percentage of total equity.

RETURN ON INVESTMENT (ROI): The percentage of loss or gain from an investment.

RETURN ON NET ASSETS (RONA): Excess over revenues, over expenses/net assets.

RETURN ON NET WORTH (RONW): Excess of corporate insurance company end of year net worth.

RETURN ON TOTAL ASSETS (ROTA): Excess over revenues, over expenses/total assets.

RETURN TO CAPITAL: Compromised or reduce payment on capital, to capital suppliers.

RETURN TO DEBT: Interest or principal payments to debt suppliers.

RETURN TO EQUITY: Return on equity realized by capital suppliers.

REVALUATION: An increase of the value of one currency over another.

REVENUE: Money earning by rendering healthcare goods, products or providing services.

REVENUE ATTAINMENT: Achieving the amount of revenues budgeted.

Revenue bonds: Revenue bonds are payable from the earnings of a revenue-generating facility, such as water, sewers, or utility systems, hospitals or clinics. The risk, however, is that the facility will not generate income sufficient to pay the interest, and therefore the yield is somewhat higher than for a general-obligation bond. Revenue bonds are supported only by the revenue earned, so if the project, like a hospital does not produce revenues sufficient to pay the interest on the bonds, then the bonds go into default. Therefore, it is important to properly evaluate the municipality’s ability to tax and/or the assumptions used to project the facility’s revenue.

REVENUE BUDGET: An-operating and/or non-operating revenue forecast.

REVENUE BONDS: A bond that pays interest only if the debtor earns enough revenue, such as in a hospital revenue bond.

REVENUE CENTER: Healthcare or other business unit that produces income.

REVENUE CODE: Payment codes for services or items in FL 42 of the UB-92 found in Medicare and/or NUBC (National Uniform Billing Committee) manuals (42X, 43X, etc).

REVENUE ENHANCEMENT: Augmenting traditional revenue sources of the enterprise with new sources, products or healthcare services.

REVENUE EXPENDITURES: Expensed costs that maintain an asset or restores it to functional working order.

REVENUE FUND: A fund established by the bond contract of a revenue bond issue into which all gross revenues from the financed project are initially placed and from which the moneys for all other funds are drawn.

REVENUE PRINCIPLE: The basis for recording the time and amount of revenues.

Revenue Share: The proportion of a practice’s total revenue devoted to a particular type of expense. For example, the medical practice expense revenue share is that proportion of revenue used to pay for practice expense.

REVENUE VOLUME VARIANCE: (Actual volume – budget volume) X actual volume.

REVERSAL: The often sharp economic change in a financial market, company or individual; usually in a negative direction.

REVERSE CAPITATION: A payment method that capitates medical specialists but pays primary care physicians at some fee-for-service rate.

REVERSE ENTRIES: An accounting entry that changes the credit and debit of a prior adjusting entry.

REVERSE LEVERAGE: Condition when interest payments or dividends exceed the cost of borrowed money.

REVERSE SPLIT:  A corporate reduction in the number of share outstanding, thereby increasing the value of each remaining share.

REVERSE SWAP: The exchange of bonds in a portfolio to restore it to its original aggregate position.

REVOLVING CEDIT LINE:  A continuous line-of-credit up-to a pre-negotiated limit.

Revolving Debt / Credit: Revolving credit is credit that is repeatedly available up to a specified amount as periodic repayments are made. Revolving debt is the total amount of the credit that has actually been used and is outstanding at any given point in time. Examples of consumer credit plans that provide revolving credit include major bank cards, such as American Express, Visa, MasterCard and Discover, and department store and gas cards.

REVOLVING FUND: An account where (money) funds are continuously received and disbursed.

RIGGED: Illegal securities or other market price manipulations.

Right to Rescission: The legal right to void or cancel a contract in such a way as to treat the contract as if it never existed.

Rights: Granted to existing shareholders when a company issues more shares in a new issue. Usually the rights last for only a short time and the shares are offered at a lower price than they will be offered to the public. “Preemptive rights” are sometimes mandated by state laws to allow existing shareholders to maintain a proportionate share of ownership, thus preventing “dilution” of their existing shares.

RIGHTS OF ACCUMULATION: A privilege offered by some investment companies that allows the investor to include the total market value of shares already owned in calculating sales charges when a new investment is made in additional shares.

RIGHTS OFFERING: The sale of new securities to existing stockholders.

RISK: Uncertainty (1) Market risk – the uncertainty that a particular security may fluctuate in price solely due to investor sentiment in the “market”, sometimes called Systematic Risk. This is best observed when bad news hits Wall Street and almost all stocks go down regardless of their earnings strength. (2) Business or Financial risk – the risk that the business in which you have invested money will not do well. If the company’s products don’t sell and earnings plummet, you can expect the stock price to do so as well. (3) Credit risk – a risk that applies with debt securities (bonds). The investor has extended credit to the issuer when he buys their bonds. Just as personal lives, if we loan money to someone, there is always the chance that they will not be able to pay us back. Lower rated bonds, called “junk bonds” carry a great deal of credit risk. (4) Liquidity risk – just how marketable is the investment you’re holding. Some investments, like real estate, are not easily sold quickly; we say that they don’t have great liquidity. There is no liquidity risk with mutual funds or variable annuities as Federal Law requires redemption by the issuer after tender of a redemption request. (5) Money rate or interest rate risk – as interest rates go UP, the prices of securities sold primarily for their fixed income (like bonds and preferred stock) go DOWN. Since the investor has no control over interest rate movements, this is a real risk. (6) Purchasing power or inflation risk – the uncertainty that a dollar will not purchase as much in the future as it does now. This risk is found in all FIXED dollar securities such as bonds and fixed annuities. It was primarily due to this risk that variable annuities and variable life insurance were developed as their portfolios, consisting largely of common stock provide a hedge against inflation.

RISK-ARBITRAGE: A purchase and/or short sale of the same or potentially equal securities at prices that do not immediately guarantee a profit. Alternatively it is to play one security against another to take advantage of a disparity in price. Usually used during corporate takeover attempts.

Risk-Adjusted Capitation: A method of payment to either a healthcare organization or individual medical provider which takes the form of a fixed amount per person per period and which is varied to reflect the health characteristics of individuals or groups of individuals.

RISK-ADJUSTED RETURN ON CAPITAL (RAROC): Same as Return on Equity (ROE) with the net income numerator, and denominator (capital) adjusted for financial risk.

RISK-ADJUSTED RETURN ON EQUITY (RAROE): Same as Return on Equity (ROE) with the net income numerator, and denominator (equity) adjusted for financial risk.

RISK AVERSE: Satisfaction with lower investment returns, all things being equal.

RISK FREE RATE: The rate of return available on a default free government investment.

RISK INDEX: The present value function factor for risk-less cash flow, divided by the present value interest factor for a risky asset.

RISK PREMIUM: The interest-rate difference between what investors require for a certain security, and the risk-free rate of return.

Risk tolerance: The ability of an investor to tolerate the chance of loss on an investment. Risk measurement attempts to quantify these chances, which can result from inflation, interest rates, market fluctuations, political factors, foreign exchange, etc.

RISKLESS TRANSACTION: A simultaneous risk-less transaction.

Road show: Presentation of a company to potential investors; especially in an IPO.

ROLLING BUDGET: Continual upgrade of a budget for a given time period, in advance.

ROLL UP: Progression from one option to another with a larger exercise price.

ROTH IRA: Personal retirement account created by the Taxpayer Relief Act of 1997 allowing continued capital to accumulate tax free under certain conditions.

ROUND LOT: A unit of trading or a multiple thereof. On the New York Stock Exchange stocks are traded in round lots of 100 shares for active stocks and 10 shares for inactive ones. Bonds are traded as percentages of $1,000, with municipal bonds traded in minimum blocks of five bonds ($5,000 worth).

ROUND TRIP: Sale and purchase of a security within a short period of time.

RUBBER CHECK: A bounced check with insufficient funds.

RULE OF 72: 72 divided by interest rate equals the time period in years for a doubling of a principle sum.

RULE 144: An SEC rule permitting the occasional sale of restricted (“letter”) securities or insider holdings in modest amounts, without registration with the SEC.

RULE 147: Rule dealing with exemption from SEC registration under the 1933 Act for securities offerings limited to residents of one state or territory; implements and provides standards for the intrastate exemption.

RULE 405: The stock-broker’s rule to know each customer.

RULES OF FAIR PRACTICE: A set of rules established and maintained by the NASD Board of Governors regulating the ethics employed by members in the conduct of their business.

RULE OF THUMB: Industry specific mathematical equations for business entity valuation based on several variables like overhead expenses, revenues, industry specific risk, and combined with hearsay, experiences or heuristics.

RUN: A sudden demand at a bank for money by its depositors.

RUN AHEAD: Illegal practice of purchasing securities for a stock-broker’s account, prior to client order executions.


S corporation: A corporation that chooses to be generally exempt from federal income tax. Its shareholders, who all must consent to this tax treatment, include in their incomes their share of the corporation’s separately stated items of income, deduction, loss and credit, and non-separately stated income or loss.

SAFE HARBOR: Prudent steps that avoid illegal tax, financial accounting, healthcare management or business accusations and charges.

Salary continuation plan: A nonqualified deferred compensation plan that provides a stated benefit at retirement or other future event without a stated reduction in the employee’s current compensation.

salary payable: Wages owed to employees.

Salary reduction plan: A nonqualified deferred compensation plan under which an employee agrees to reduce currently payable compensation by a stated amount (or according to a specified formula), with the accumulated reduction amount payable at retirement or other future event.

SALES ALLOWANCE: Sales discounts, write-off, deductions or expenses.

SALES CHARGE: An amount charged to purchase shares in most mutual funds. The maximum charge is 8.5 percent of the initial investment. The charge is added to the net asset value per share in the determination of the offering price.

SALES DISCOUNT: A reduction in the amount receivable to induce a purchase.

SALES JOURNAL: A special journal to record credit sales.

SALES MIX: A combination of products or services that make up total sales.

SALES REVENUE: The amount earning by providing healthcare products or services.

SALVAGE VALUE: Amount received for the sale of a fixed asset at the end of a project or its useful life.

SANTA CLAUSE RALLY: Historic rise in stock market prices between New Year and Christmas Day.

SARBANES-OXLEY ACT (SARBOX): 2002 Corporate Responsibility Act (CRA), covering financial, accounting, certification and new protections governing securities fraud.

SAVINGS: Income not consumed in a given time period; money deferred.

SAY’S LAW: A theory that the production of a certain amount of goods and services results in the generation of an amount of income sufficient to buy that output.

SCALPER: One who engages in quasi-legal financial transaction for a quick profit.

SCARCITY: In-equilibrium or unbalance between wants and needs; desires and satisfaction; especially in healthcare.

Schedule A: The schedule used to summarize a taxpayer’s itemized deductions. Itemized deductions include medical and dental expenses (in excess of 7.5% of the taxpayer’s AGI), state and local taxes, deductible interest, charitable contributions, miscellaneous deductions (in excess of 2% of the taxpayer’s AGI), etc.

Schedule C: The schedule used to summarize revenues and expenses (accrual basis) or receipts and disbursements (cash basis) for the self-employed taxpayer. Profits or earnings from self-employment result in the imposition of the self-employment tax at a rate of 15.3%. Used to report profits or losses for sole proprietorships.

Schedule D: The tax schedule used to report gains and losses.

SCHEDULE 13D: SEC disclosure rule to document 5% beneficial ownership in a public company.

Schedule E: The tax schedule used to report profits or losses from royalty and rental income properties. It is also used to report most of the information from Schedule K-1.

Schedule K-1: A form issued by partnerships and S Corporations to their partners and shareholders, respectively. This schedule retains the “character” of the partnership or S Corporation’s income and expense items for “pass-through” to the individual’s Form 1040.  The schedule provided to each partner in a partnership (or shareholder in an S corporation), and also supplied to the Internal Revenue Service as an attachment to the partnership (or S corporation) tax return – Form 1065 (Form 1120S), showing the partner’s (shareholder’s) distributive share of partnership (shareholder’s) profits and losses.  (Though not attached to the individual taxpayer’s/partner’s/shareholder’s individual tax return – Form 1040 – the Schedule K-1 is very similar to a Form W-2 that an employee would receive from an employer at year-end.)

SCRAP VALUE: Salvage value of an asset.

SCRIPOPHILY: Hobby of collecting securities certificates for scarcity, rather than investment value.

SEASONED ISSUE: Mature securities traded for a length of time with good second market liquidity.

SECONDARY MARKET: (1) The aftermarket for securities; the resale of outstanding securities. (2) A public offering by selling stockholders. If listed on the NYSE, a member firm may be employed to facilitate such an offering in an over-the-counter net transaction for a purchaser, with prior approval of the Exchange. Both member and nonmember broker/dealers can participate in this distribution.

Secondary offering: A sale of a large block of securities already issued by a corporation and held by a third party. Because the block is so large, the sale is usually handled by “investment bankers” who may form a “syndicate” and peg the price of the shares close to current market value.

Section 1244 stock: Stock issued (generally the first $1 million of common or preferred) by a corporation that obtains greater than 50% of its annual gross income receipts from the conduct of an active business. The subsequent dispossession of the stock by a stockholder receives favorable tax treatment.

SECTION 501 (c)(3): IRS Code non-profit organization.

Sector: A group of stocks in one industry, such as drug stocks, durable medical equipment and healthcare.

Sector rotation investing: A style of investing in which the goal is to out-perform the market by investing more heavily in the sectors that are forecasted to perform better than the market in expected economic scenarios.

SECRED CLAIM: Receipt baked by assets of the issuing company.

SECURED DEBT: Loan, note, certificate or bond baked by assets of the issuing company.

Secular annuity: An arrangement for funding a deferred compensation agreement that involves the purchase of a commercial annuity by an employer for the benefit of an employee. Amounts paid to the insurance company by the employer are recognized as taxable income by the employee in the year they are paid. Earnings on the annuity are taxed to the employee as they are withdrawn.

Secular trust: An irrevocable trust for the exclusive benefit of an employee that provides benefit security but not deferral of taxation on amounts transferred to the trust by an employer as compensation.

SECURED BOND: Loan backed by pledged assets, such as more federal bonds, as collateral; insured bond as to payment and principle.

SECURED LOAN: Loan backed by specifically pledged assets as collateral.

SECURITIES: Any note, stock, bond, evidence of debt, interest or participation in a profit-sharing agreement, investment contract, voting trust certificate, fractional undivided interest in oil, gas, or other mineral rights, or any warrant, pre-emptive right or option to subscribe to, or purchase, any of the foregoing. Also includes variable annuities and various other insurance products; a capital claim.

SECURITIES ACT of 1933: Legislation that protects the public against the issuance and distribution of fraudulent securities by requiring the filing of a revealing registration statement with the Securities Exchange Commission.

SECURITIES AND EXCHANGE COMMISSION (SEC): Established by Congress to protect investor interest, the commission administers compliance with the Securities Act of 1933, the Securities and Exchange Act of 1934, the Trust Indenture Act (TIA), the Investment Company Act (ICA), the Investment Advisers Act (IAA), and the Public Utility Holding Company Act (PUHCA).

SECURITIES INVESTOR PROTECTION CORPORATION (SIPC): A government-sponsored, private corporation that guarantees repayment of money and securities in customer accounts valued at up to $500,000 per separate customer ($100,000 cash), in the event of a broker/dealer bankruptcy.

SECURITIZATION: The act of aggregating debt or companies in a risk pool, as with Physician Practice Management Corporations (PPMCs), and then floating new securities with reduced risk backed by the pool.

SEGMENTATION: The separate divisions of a company or business.

SELF DIRECTED: Management by the account or asset holder.

Self-employment tax: The self-employment tax of 15.3% represents an amount equivalent to both employee (7.65%) and employer (7.65%) contributions to Social Security and Medicare. The self-employment tax rate of 15.3% is a combination of a 12.4% Old Age, Survivors, and Disability Insurance (OASDI) tax plus a 2.9% Medicare tax. The OASDI component is subject to a wage base or ceiling that is inflation-indexed and increases each year ($72,600 for 1999 or a total of $9,002.40 in OASDI tax; $68,400 for 1998 or a total of $8,481.60 in OASDI tax). Alternatively, the Medicare tax is computed on all self-employment income and is not subject to a “ceiling.”

Self-Funding: The practice of an employer or organization assuming responsibility for health care losses of its employees. This usually includes setting up a fund against which claim payments are drawn and processing is often handled through an administrative services contract with an independent organization.

SELF-INSURANCE: An individual or organization that assumes the financial risk of paying for health care, life, disability, or other insurable risks and perils.

SELF-INSURED: An individual or organization that assumes the financial risk of paying for health care, life, disability or other insurable risks, hazards, and perils.

SELF-PAY: The individual responsible for health insurance claims, sans a health insurance policy contract (private pay).

SELF REGULATORY ORGANIzATIOn (sro): One of eight organizations accountable to the SEC for the enforcement of securities laws within an assigned field of jurisdiction.

SELL: To cover ownership of an asset or security for value or money.

Sell discipline: An investor’s criteria for selling a stock. A value investor, for instance, may sell when the price/earnings ratio of the security is a certain percentage higher than its historical level.

SELLER FINANCING: One who provide cash, credit or securities for an economic transaction.

SELLER’S MARKET: Situation when there is more demand for a healthcare good, product or service, than available supply.

SELLER’S OPTION: A stock or bond or other settlement contract in which the certificates are due at the purchaser’s office on a specific date stated in the contract at the time of purchase.

SELLING COSTS: Expenses incurred by a healthcare or other entity to influence the sale of products, gods or services.

SELLING CONCESSION: A fraction of a securities underwriter’s spread, granted to a selling group member by agreement. It is payment for services as a sales agent for the underwriters.

SELLING DIVIDENDS: The unfair and unethical practice of soliciting purchase orders for mutual fund shares solely on the basis of an impending distribution by that fund.

SELLING EXPENSE: A fraction of the sales spread on certain securities, granted for associated sales costs; payment for sales expenses.

SELLING GROUP: Selected broker/dealers who contract to act as selling agents for underwriters and who are compensated by a portion of the spread called selling concession on newly issued stocks. They assume no personal responsibility or financial ability to the issuer, as opposed to a syndicate member.

Selloff: Pressured securities sales due to unfavorable economic conditions.

SELLOUT: Upon failure of the purchasing firm to accept delivery of the security and lacking a rejection form, the seller can, without notice, dispose of that security in the marketplace at the best available price and hold the buyer responsible for any financial loss resulting from the default.

SELL-ORDER: Stock broker instructions to sell a securities position or other asset.

SELL-STOP ORDER: A securities order that becomes a market order to sell if and when someone trades a round lot at or below the stop price used to protect a long position.

SEMI-ANNUAL COMPOUNDING: Bi annual or twice-per-year interest payments.

SEMI-FIXED COST: Stepped or incremental cost.

SEMI-VARIABLE COST: Stepped or incremental cost.

SENIOR SECURITES: Bonds, debentures, debt or preferred stocks. These issues have a prior claim, usually in the order named, to assets, earnings, and the proceeds of dissolution. Mutual funds do not issue senior securities, but they may purchase them for their portfolio.

SENSITIVE MARKET: A financial and volatile marketplace easily influenced by bad or good news.

SENTIMENT: The amount of good or bad feelings about a particular financial market; to be either bullish or bearish; economic emotions.

SEPARATE ACCOUNT: A specialized legal entity created by an insurance company to incorporate contracts offered by the company under a variable annuity insurance plan.

SEPARATE CUSTOMER: As defined by SIPC, the accounts of a given customer at a single brokerage firm. Different types of accounts held by the same person do not constitute separate customers.

SERIAL BOND: An issue that matures in relatively small amounts at periodic stated intervals, as opposed to term or balloon bonds.

SERIAL ISSUE: An issue of bonds having maturities scheduled over several years, thereby allowing the issuer to amortize principal over a period of years. Maturity schedules for serial bonds often provide for level debt service or level principal payments.

Series E and EE Bonds: are issued in denominations of as little as $50 and are purchased at a discount from their face value. For example, a bond of $50 with a 5-year maturity is sold for $37.36. If it is redeemed at maturity, the bondholder receives the entire $50, thereby earning a 6% annual yield. The rate is a variable rate, 85% of the average rate on 5-year treasury securities. The rate fluctuates every six months, thereby giving the investor the opportunity to enjoy higher yields should interest rates rise. The investor who chooses to redeem the bond before maturity would earn a lesser return, reflecting the early redemption. Both purchase and redemption are transacted through a commercial bank. The interest earned on these bonds is exempt from taxation until the bonds are redeemed, thereby giving even those with modest-sized investments the benefit of tax shelter. Also, Series EE bonds provide investors with a way to fund future tuition requirements through the accumulation of tax-free interest.

Series H and HH Bonds: Series HH bonds are sold in larger denominations (with a minimum face value of $500), and have a maturity of 10 years. Unlike that of Series EE bonds, the interest on Series HH bonds does not accrue, so it is subject to federal income taxation annually. These bonds are also purchased and redeemed at commercial banks.

SERIES OF OPTIONS: Options of the same class having the same exercise price and expiration month.

SERIES 3: Sales license for commodities futures.

SERIES 6: Sales license for mutual funds and variable annuities.

SERIES 7: Sales license for all types of securities products, with the exception of commodities futures.

SERIES 26: Supervisory license for investment company and variable annuity products.

SERIES 63: License to sell securities and render investment advice.

SERVICE COMPANY: A firm that provided intangible services like medical and health care, rather than merchandise or tangible physical products.

SERVICE LIFE: An asset’s period of usefulness.

SERVICE INDUSTRY: Industry that provided intangible services like medical and health care, rather than tangible or manufactured physical products.

Servicing a Loan: The ongoing process of collecting loan payments, including accounting for and payment of relate taxes, if any.

Settlement price: The official price at the end of a trading session. This price is established by the Option Clearing Corporation, and it is used to determine changes in account equity or margin requirements, and for other purposes.

SETTLEMENT: To complete and pay for a securities transaction.

SETTLEMENT (DELIVERY) DATE: The day on which certificates involved in a transaction are due at the purchaser’s office. Securities purchase payment date.

Shadow-Prices: Imputed or estimated health insurance costs not valued accurately in the marketplace. Shadow prices also are used when market prices are inappropriate due to regulation or externalities.

SHAM: An unethical or illegal transaction; usually groundless to avoid taxation.

share: a single-unit of a stock security.

SHARE AVERAGING: The periodic purchase of the same number of securities shares to reduce their mean cost basis.

Share Price: The net asset value of an individual share of a mutual fund.

SHAREHOLDER: Owner of financial market products or assets like stocks, bonds, mutual funds, REITS, and ETFs, etc.

Shareholders’ equity: Total assets minus total liabilities of a company divided by the number of common shares outstanding. Theoretically, this is the value of the company to the shareholder at liquidation.

SHARPE, WILLIAM; INDEX: A risk adjusted ratio measure of financial performance the correlates the return-in-excess of the risk-free-rate of return, by a portfolio’s standard deviation.

SHELF REGISTRATION: Corporate ability to sell pre-SEC registered shares under favorable economic climates with a minimum of paperwork.

SHORT: Selling a security not owned.

SHORT-AGAINST-THE-BOX: A short sale made when the investor owns securities identical to those sold short. The purpose is to defer, for tax purposes, recognition of gain or loss with respect to the sale of securities “in the box”.

SHORT COVER: Long (owned) purchase of securities by a short seller investor to replace those borrowed short (un-owned) sale.

SHORT INTEREST: Stocks sold short and not repurchased to close out a short position.

Short interest theory: When short interest positions in a stock are high (see short sale), although it is an indication that many investors feel the stock price will drop, the theory is that the phenomenon is bullish for the stock because the short sellers will all have to purchase the stock in the near future to cover their short positions.

SHORT-OPTION: An option that has been written.

Short option position: The position of an option writer that represents an obligation to meet the terms of the option if it is assigned.

Short position: Any open position that is expected to benefit from a decline in the price of the underlying stock such as long put, short call, or short stock.

SHORT-RUN: Period or length of time where some business inputs can not be varied.

Short sale: The sale of a security (i.e., stocks and bonds) before it has been acquired.  An investor anticipates that the price of a stock will fall, so he sells securities borrowed from the brokerage firm. The securities must be delivered to the firm at a certain date (the “delivery date”), at which time the investor expects to be able to buy the shares at a lower price to “cover his position.”

SHORT SALE RULE: SEC regulation that mandates short sales be made only in rising or bull market; on a plus tick.

SHORT SQUEEZE: Sharp upward movement of a futures contract inducing investors to buy in order to prevent loss by covering positions.

SHORT-TERM: Less than one year in the accounting industry.

Short-term capital gain or LOSS:  A capital gain or loss that is not long term.

SHORT-TERM LIQUIDITY: Ability to meet bills as they come due.

SHORTAGE: Occurs when the healthcare quantity demanded exceeds the quantity supplied.

SHUTDOWN POINT: Occurs when prices have fallen to a level below which just allows a healthcare or other entity to cover its minimum average variable costs.

SHORT-TERM FINANCING: Borrowing that is paid back in less than a year.

SHORT-TERM INVESTMENTS: Financial investments or other assets liquidated in less than a year.

SHRINKAGE: Inventory or Durable Medical Equipment (DME) reduction; difference between recorded and actual inventory; lost or unaccounted for inventory.

Signature Card: A contractual form, executed by an account holder, establishing account ownership and setting forth some of the basic terms of the account and provisions of the deposit contract.

Signature Guarantee: – Assurance by a financial institution or other entity that a particular signature is valid. Typical guarantors include commercial banks, trust companies, savings and loan associations, or member firms of a national securities exchange.

simple interest: Interest earned on the principal sum only, with no interest computed on interest or interest past due, as in compound interest.

SIMPLE IRA: A form of salary reduction plan.

SIMPLIFIED ARBITRATION: A method of arbitration to be used when there is a small amount in dispute, no more than $10,000. This method can be used for disputes between members (Simplified Industry Arbitration) and for disputes between a customer and a member (Simplified Arbitration). Two very important points to remember about arbitration are: (1) that decisions and rulings are always final and binding. (2) A customer will be involved in arbitration only at the insistence of said customer. This insistence may be done at time of the dispute or the customer may sign a pre-dispute arbitration agreement, in which he is stating in advance that any dispute that may arise will be settled under arbitration.

Simplified employee PENION (SEP): An IRA plan that is simplified and easy to administer for self-employed people. A plan that establishes IRAs for employees and independent contractors, providing for the deduction of the lesser of $30,000 or 15% of the employees’ taxable compensation.

SIMULTANEOUS (RISKLESS) TRANSACTION: A transaction in which the broker/dealer takes a position in security only after receipt of an order from a customer, for the purpose of acting as principal. This is the one dealer transaction that requires disclosure of mark-up.

SINGLE DRUG PRICER (SDP): Drug-pricing file containing the allowable price for each drug covered incident to a physician’s service, drugs furnished by independent dialysis facilities that are separately billable from the composite rate, and clotting factors to inpatients. The SDP is in effect, a fee-schedule similar to other CMS fee schedules.

SINGLE PREMIUM DEFERRED ANNUITY (SPDA): Lump sum tax deferred investment with insurance annuity payout.

SINGLE STEP INCOME STATEMENT: Income statement format that groups all revenues together and then lists and deducts all expenses together without producing subtotals.

SINKER: Debt repaid with a sinking bond fund used to redeem debt, loaned or preferred stock securities.

SINKING FUND: (1) A fund established by the bond contract of an issue into which the issuer makes periodic deposits to assure the timely availability of sufficient moneys for the payment of debt service requirements. The amounts of the revenues to be deposited into the sinking fund and the payments are determined by the terms of the bond contract. Under a typical revenue pledge this fund is the first (under a gross revenue pledge) or the second (under a net revenue pledge) to be funded out of the revenue fund. This fund is sometimes referred to as a “Debt Service Fund”. (2) A separate account in the overall sinking fund into which moneys are placed to be used to redeem securities, by open-market purchase, request for tenders or call, in accordance with a redemption schedule in the bond contract.

SIPC: Securities Investor Protection Corporation.

Skimming: The practice in health programs paid on a prepayment or capitation basis, and in health insurance, of seeking to enroll only the healthiest people as a way of controlling program costs.

SLEEPER: Security with little investor interest but with great potential.

sliding scale commission: A health or other insurance commission adjustment on earned premiums under a formula whereby the actual commission (paid by a reinsurer to a ceding insurer) varies inversely with the loss ratio, subject to a maximum and minimum.

Sliding Scale Deductible: A health insurance or other deductible that is not set at a fixed amount, but rather varies according to income.

SLIDING SCALE MODEL: A discounted medical fee schedule based on the patients’ ability to pay.

SLUMP: Short-term financial, business or economic depression.

Small business stock: Stock from a corporation with gross assets of $50 million or less at the time the stock was issued and held by the original owner for more than five years prior to the sale of the stock. A sale may receive favorable tax treatment.

Small capitalization stocks: Publicly traded company with a market capitalization of $500 million or less.

SMALL FIRM EFFECT: The tendency of securities of smaller corporations to outperform larger ones.

SOCIAL SECURITY TAX: The Federal Insurance Contributions Act (FICA) tax.

Sole proprietorship: An unincorporated business such, as a small medical practice, having a single owner. Although many small businesses are sole proprietorships, this business form is not recommended because of the unlimited liability accruing to the owner. Incorporation serves to shield the owner from liability.

Solvency: Ability to meet financial obligations as they are due.

SOUR BOND: A bond or other debt obligation in default.

SOURCE DOCUMENT: Original hardcopy of a business, financial, accounting, purchase/sale or other transaction.

SPECIAL ASSESSMENT BOND: An obligation payable from special assessment revenues.

SPECIAL CASH ACCOUNT: Older reference to a SEC Regulation T account in which the customer is required to make full payment on the first business day after the trade date.

SPECIAL DEALS INTERPRETATION: A mutual fund underwriter’s improper practice of disbursing anything of material value (more than $100) in addition to normal discounts or concessions associated with the sale or distribution of investment company shares.

SPECIAL INEREST PUCHASE: Purchase of a healthcare or other business interest in order to enjoy economies of scale, market advantages, synergies or other strategic competitive enhancements.

SPECIAL JOURNAL: Accounting journal to record a specific type of unusual transaction.

SPECIAL MISCELLANEOUS ACCOUNT (SMA): An account used by a broker/dealer for the purpose of journa1ing the excess equity in a customer’s margin account.

SPECIAL TAX BOND: A bond secured by one or more designated taxes other than ad valorem taxes. For example, bonds for a particular purpose might be supported by sales, cigarette, fuel, or PET scan business license taxes; however, the designated tax does not have to be directly related to the project purpose. Such bonds are not considered “self-supporting” debt.

SPECIALIST: A member of a securities exchange with the essential function of maintaining an orderly market, insofar as reasonably practicable, in the stocks in which he is registered as a specialist. To do this, he must buy and sell for his own account and risk, to a reasonable degree, when there is a temporary disparity between supply and demand. In order to equalize trends, he must buy or sell counter to the direction of the market. At all times the specialist must put his customer’s interest before his own. All specialists are registered with the exchange, but are not employees of that exchange.

SPECIALIST’S BOOK: The notebook a New York Stock Exchange specialist in a given security uses to keep a record of the buy and sell orders he receives for execution at specified prices. He maintains them in chronological sequence of receipt and only limit and stop orders are in the Specialist’s Book.

SPECIALIZED INVESTMENT COMPANIES: Investment companies that concentrate their investments in one industry, group of related industries, or a single geographic area for the purpose of reaching their objectives.

SPECULATION: An investment with a potential large return that is very risky.

SPECULATOR: One who accept large financial risks in return for potential large rewards.

SPECULATIVE BONDS: High-yield, high-risk junk bonds.

SPILLOVER CASH FLOW: Indirect cash-in or cash-outflows that occurs elsewhere in a healthcare organization.

SPIN-OFF: A distribution of stock in a company that is owned by another corporation and that is being allocated to the holders of the latter institution.

SPLIT: A division of the outstanding shares of a corporation into a larger number of shares, entitling each owner to a fixed number of new shares. The shareholder’s overall equity remains the same, though he owns more stock, since the total value of the shares remains the same. For example, the owner of a hundred shares, each worth $100, would be given two hundred shares, each worth $50, in a two-for-one split.

SPLIT COUPON BOND: A low or zero initial coupon bond that is followed by a higher coupon rate of interest.

SPOT PRICE: The currency price of a commodity.

SPREAD: (1) The difference in value between the bid and offering prices. (2) The difference between the public offering price and the amount received by the issuer.

SPREAD (OPTION): Purchase and sale of option contracts of the same class with different expiration dates and/or strike prices.

STABILIZATION: A securities underwriter/syndicate manager is empowered by the members of his group to maintain a bid in the aftermarket at or slightly below the public offering price, thus “stabilizing” the market and giving the syndicate and selling-group members a reasonable chance of successfully disposing of their allocations. This practice is a legal exception to the manipulation practices outlawed by the Securities and Exchange Act of 1934.

STAG: One who gets in and out of stocks or a fast profit.

STAGFLATION: A time of inflation without GNP growth.

STANDARD COST: A per unit express predetermined cost.

START –UP: A new business venture, such as a medical practice or emerging healthcare organization (EHO).

STATED VALUE: Similar to par value; accounting value for stock which is not fair market value or current price.

Statement of cash flows: A report of cash receipts and disbursements classified according to three major activities: financing, operations and investments. One of four main financial statements which document where cash went in an organization, for a specific time period.

STATEMENT OF CHANGE IN NET ASSETS: Documents the changes of net assets from one period to another.

STATEMENT OF FINANCIAL POSITION: a corporate balance sheet.

STATEMENT OF OPERATIONS: Newer fourth financial statement which document an entities revenues and expenses during an accounting period.

Statement of owner’s EQUITY (capital): Summary of changes in an accounting entry, for owner’s equity, during a specific period in time.

STATEMENT OF REVENUES AND EXPENSES: Corporate income statement.

Statement of STOCKHOLDER’S EQUITY (capital): Summary of changes in an accounting entry, for stockholder’s equity, during a specific period in time.

STATEMENT OF RETAINED EARNINGS: That part of a healthcare or other company’s profits that is not paid out in dividends but used by the company to reinvest in the business.

STATIC BUDGET: A budget prepared for only on level of production volume for goods or services.

STATUTORY MERGER: Acquisition of more than 51% ownership in a corporation.

STRAIGHTLINE DEPRECIATION: Cost allocation for corporate plants and equipment, by equal amounts annually over a period of time.

STREET NAME: The registration of securities in the name of a brokerage firm, rather than the buyer.

Spread: A position consisting of two parts, each of which alone would profit from opposite directional price moves. These opposite parts are entered simultaneously in the hope of limiting risk or benefiting from change or price relationship between the two.

STAFFING: Recruiting, interviewing and hiring healthcare or other workers.

STAGFLATION: A period of high inflation and high unemployment.

Standard deviation: A statistical method used to measure the dispersion around an asset’s average or expected return and the most common single indicator of an asset’s risk.

Standard & Poor’s 500 Index (S&P 500): A daily measure of stock market performance that is based on a selected group of 500 companies. The S&P 500 is often used as a general indicator of the equity market.

STANDARD & POOR’S CORPORATION: An independent financial service company, a subsidiary of McGraw-Hill Company, which provides ratings for municipal securities and other financial information to investors.

STAND-BY UNDERWRITING AGREEMENT: An agreement between an investment banker and a corporation, whereby the banker agrees, for a negotiated fee, to purchase any or all shares offered as a subscription privilege that are not bought by the rights holders by the time the offer expires.

STANDARD OF VALUE: The exact type of value sought in a valuation engagement; for example fair market value, liquidation value, investment value, etc.

Statement of Additional Information (SAI): A supplement to information contained in a mutual fund’s prospectus. It provides more detailed information about fund policies, operations and risks, among other things.

STATIC BUDGET: Estimate for a single level of activity.

STATUTORY UNDERWRITER: An individual or corporation that purchases an unregistered security and offers it in a public distribution without an effective registration statement. Such parties are subject to fine and/or imprisonment.

STATUTORY VOTING: A means by which a stockholder is given the right to cast one vote for each share owned in favor or against each of a number of proposals of director/nominees at a formal meeting convened by the corporation.

STEENTH: Slang term for 1/16th of a point.

STEERAGE DISCOUNT: Volumes of patients sent to selected providers in return for step discounts.

STEP COSTS: Expenses that contains both fixed and variable cost elements.

STEP FIXED COSTS: Fixed costs that increase in total at certain points as the level of activity increases.

STOCHASTIC INDEX: Technical tool to determine a financial market’s over-sold or over-bought condition; risk dampening method.

STOCK: Certificate representing ownership in a corporation; they may yield dividends and can appreciate or decline in value; an equity.

STOCK AHEAD: An expression used on the floor of the New York Stock Exchange to signify that one or more brokers had made a prior bid (or offer) at the same price as an order you had entered, so the order was ahead of yours on the specialist’s book.

Stock buyback: A corporation may repurchase shares outstanding on the open market and retire them as “treasury shares.” This anti-dilutive action increases earnings per share, which consequently raises the price of the outstanding shares. Companies often announce a “share repurchase plan” when insiders feel the company is undervalued; the action strengthens the company and helps preclude a takeover.

Stock dividend: Payment of a dividend in stock rather than cash, usually as a percentage of existing shares held. May be stock in the original company or that of a subsidiary. A stock dividend is a way for a corporation to maintain its cash position without being subject to the accumulated earnings tax, since it reduces retained earnings and increases capital stock on a company’s books. A stock dividend also carries a tax advantage for the shareholder, since a dividend would be subject to ordinary income tax but the tax on capital gains is not payable until the shares are sold.

STOCK DIVIDEND DISTRIBUTION: A distribution to shareholders made upon declaration of a corporations’ board of directors. This distribution differs from the usual disbursement in that it is given in the form of additional shares of stock instead of money.

STOCK HOLDER: A person who owns stock in a corporation; equity holder; share holder.

STOCK HOLDER’S (OWNER’S) EQUITY: The owner’s equity of a corporation.

Stock index futures: A futures contract that has as its underlying entity a stock market index. Such futures contracts are generally subject to cash settlement.

STOCK INDEX OPTIONS: The right to sell and buy option contracts based on an average of stock prices.

STOCK JOCKEY: Slang term for a stock-broker who sells and buys frequently.

STOCK (OR BOND) POWER: A legal document either on the back of registered stocks and bonds or attached to them, by which the owner assigns his interest in the corporation to a third party, allowing that party the right to substitute another name on the company records in place of the original owner’s.

Stock option: A right to purchase a security at a specified price at some time in the future.

STOCK OUT: Depletion of inventory.

STOCK REPURCHASE: The purchasing and retiring of equity by the issuing corporation.

STOCK REVERSE SPLIT: The reduction of outstanding shares of a company into a fewer number of shares with a higher price, while the overall equity in the company remains the same.

STOCK SCREENING: A computerized method of stock picking according to pre-selected criteria.

Stock split: The division of the outstanding shares of a company into a larger number of shares, with a lower price but while the overall equity in the company remains the same. Shareholders have more shares but the same proportionate interest in the company. Unlike a stock dividend, a stock split does not affect the books of the company. After a split, the shares will immediately fall to a proportionate market value (that is, in a 2-for-1 split, $30 shares will fall to $15 each). A split makes the stock cheaper and helps to broaden ownership in the company. A “reverse split” (1-for-10) allows a company with low share value to be noticed by institutional investors who may be restricted from considering low-priced stocks.

STOCK SYMBOL: Letters used to identify companies on listed stock exchanges; trader symbols.

STOP ORDER: A sale or purchase in order to preserve gains or limit securities losses.

STOP-LIMIT ORDER: An order that becomes a limit order to sell when someone creates a round lot transaction at, or below, the stop price.

STOPP-LOSS: Insuring with a third party against a risk that an MCO cannot financially and totally manage. For example, a comprehensive prepaid health plan can self-insure hospitalization costs with one or more insurance carriers.

STOP-LOSS LIMIT: A way medical providers limit economic risks in cases where costs are greater than reimbursement amounts.

STOP-LOSS REINSURANCE: Protects a ceding company against an excessive amount of aggregate health insurance claim losses during a certain period of time or over a percentage of earned premium income.

STOP-ORDER: A securities order from a customer to a broker that becomes a market order only if a transaction takes place at or through the price stated in the order. The sale that activates the order is called the trigger.

Stop Payment: A request to a bank not to honor or allow the payment of a check after it has been delivered but before it has been presented.

STOPPING STOCK: A market specialist’s guarantee of price to a stock-broker (for a customer order only), thus enabling the broker to try to improve upon that price without fear of missing the market.

Straddle: A securities trading position involving puts and calls on a one-to-one basis in which the puts and calls have the same strike price, expiration, and underlying entity. A long straddle is when both options are owned and a short straddle is when both options are written.

STRAIGHT DEDUCTIBLE CLAUSE: Health or other insurance policy clause that specifies either the dollar amount or percentage of loss that the insurance does not cover.

Straight line depreciation: The depreciation method in which an equal amount of depreciation (non-cash expense) is assigned to each year or period in a uniform fashion.

STREET: The slang term for Wall Street.

STREET NAME: When securities have been bought on margin (credit) or when the customer wishes the security to be held by the broker/dealer, the securities are registered and held in the broker/dealer’s firm name.

STRIKE PRICE: The exercise price for securities sales.

STRONG DOLLAR: US Dollar that can be exchanged for a large volume of foreign currency.

Style: Investment style is attributed to sophisticated institutional investors. Major styles include “value,” “growth,” and “contrarian” (going the opposite way of most investors at the time). “Bottom-up” and “top-down,” respectively, refer to picking stocks based exclusively on their individual characteristics or as a part of a broader economic view that predicts certain sectors will do better than others.

SUB-CHAPTER M: The section of the Internal Revenue Code that provides special tax treatment for regulated investment (mutual fund) companies.

SUBSCRIBERS: Those who buy usually new stock issues.

SUBJECT: Slang term for negotiated offer/bid securities prices.

SUBJECT-PREMIUM: A base or standard insurance premium.

Submitted-Charge: The charge submitted by a medical provider to the patient, insurance or managed care plan, or a private payer.

SUBORDINATED DEBENTURES: Unsecured debts that are junior (more risky) or subordinate to debenture bonds.

Subscription price: The price at which a right or warrant is offered.

SUBSCRIPTION PRIVILEGE (PRE-EMPTIVE RIGHT): A shareholder’s right to purchase newly issued shares (before the public offering). It must be exercised within a fixed period of time, usually thirty to sixty days, before the privilege expires and becomes worthless. Rights are exercisable at a value below the current market price. Rights have a market value and are actively traded. They differ from warrants in that they must be exercised within a relatively short period of time; they are proportionate to ownership and a warrant’s exercise price is always above the current market price.

Subsidiary: A company owned by more than half of the voting shares of another company.

SUBSIDIARY LEDGER: A book of accounts for individual balances, the total of which appears in the general ledger.

SUBSTANDARD BONDS: High yield and risky junk bonds.

Substantial risk of forfeiture: A “facts and circumstances” test that, if met, defers securities taxation under the economic benefit theory or under IRC §83.

SUBSTITUTES: Goods, products and services that serve a purpose similar to other items.

SUICIDE pill: Any anti-corporate takeover strategy that puts itself (company) in jeopardy.

SUITABILITY: The decision made by a stock-broker if an investment in a particular security matches objectives and financial capital of the customer.

SUMMARY COMPLAINT PROCEEDINGS: In the event of a minor infraction of NASD Rules of Fair Practice, the District Business Conduct Committee may offer the accused member a penalty of censure and/or fine up to $2,500, if he wishes to plead guilty, waive formal hearings, and all rights of appeal.

SUNK COSTS: Expenses already incurred that are unchangeable.

SUNRISE INDUSTRIES: Slang term for small growth companies, such as emerging biotechnology companies or emerging healthcare organizations (EHOs).

Superbill: A form that specifically lists all of the services provided by the physician. It cannot be used in place of the standard American Medical Association form.

Supplemental executive retirement plan (SERP): A nonqualified plan, primarily but not exclusively for executives, that provides for lost qualified pensions due to Internal Revenue Service restrictions.

SUPPLY SCHEDULE: Tabular illustration of how the quantity supplied of a healthcare good or service is related to the price.

SUPPLIES BUDGET: A projection of fixed and variable costs.

SUPPLY SIDE ECONOMICS: Financial incentives used to influence the aggregate supply curve.

SUPPLY SIDE SHOCK: An abrupt change in aggregate supply.

SUPPLY: Relationship between the price of a healthcare good, product or service, and the quantity provided by medical sellers.

SUPPLY CURVE: Illustration of how quantity supplied varies with the price of a healthcare good or service.

SUPPORT LEVEL: Security price level bottom caused by investor demand.

Supporting Organizations: A tax-exempt entity that is established by an individual or small group of donors for the purpose of supporting a public charity, like a hospital or healthcare system.

SURCHARGE: An additional expense, cost or tax.

Suspended loss: Refers to a passive activity loss that may be held, without any time limitation, to offset passive income of future years or to offset a gain when the entire activity is relinquished through sale or other disposition.

SUSPENDED TRADING: Temporary halt in the trading of a security, or a financial market; usually ahead of material information.

SUSTAINING CAPITAL REINVESTMENT: The recurring capital investment required of a healthcare or other business entity, sans the tax shield.

SUPPORT AND RESISTANCE: A technical market theory that attempts to predetermine price levels where eager investor purchases will develop (support) or aggressive selling may appear (resistance), based upon previous fluctuations for a particular security.

SUPPORTING: Form of securities market manipulation in which a broker/dealer with a short position in puts buys large blocks of the underlying security in an attempt to raise the price and reduce the loss potential on the naked puts.

SURPLUS: Occurs when the quantity of healthcare goods or services supplied exceeds the quantity demanded.

SWAP: A sale of a security and the simultaneous purchase of another security, for purposes of enhancing the investor’s holdings. The swap may be used to achieve desired tax results, to gain income or principal, or to alter various features of a bond portfolio, including call protection, diversification or consolidation, and marketability of holdings.

SWAPTION: An interest rate exchange option.

SWEAT EQUITY: Equity produced by conscientious industry; employment; hard work.

SWEEP ACOUNT: Automatic investment of idle deposit balances.

SWEETNER: Any feature added in addition to-a-securities offering to make it more attractive to investors, for purchase.

SWITCH ORDER: A contingent market securities order awaiting some pre-determined event.

SYNDICATE: A group of investment bankers usually organized along historical or social lines, with one member acting as manager that collectively insures the successful offering of a corporation’s securities. A selling group that markets securities.

SYNERGY: Combination that produces more economic output than individual component inputs.

SYNTHETIC ASSETS: Something of value artificially created from other combined assets.

SYNTHETIC EQUIVALENT POSITIONS: Trades in options that have the same profit and loss potential as a stock and option strategy. Example: long stock + long put = long call.

Synthetic position: A strategy involving two or more instruments that has the same risk/reward profile as a strategy involving only one instrument. The following list summarizes the six primary synthetic positions.

  • Synthetic long call—A long stock position combined with a long put.
  • Synthetic long put—A short stock position combined with a long call.
  • Synthetic long stock—A long call position combined with a short put.
  • Synthetic short call—A short stock position combined with a short put.
  • Synthetic short put—A long stock position combined with a short call.
  • Synthetic short stock—A short call position combined with a long put.

SYSTEMIC (SYSTEMATIC) RISK: The market risk of all securities prices which can not be reduced through business diversification or asset allocation; securities market risk.


t = time

T = Tax Rate

TACTICAL ASSET ALLOCATION: Active portfolio rebalancing based on relative market attractiveness.

TAILGATE: Unethical stock broker practice of following a client’s order for a personal brokerage account.

TAKE: Slang term for profit.

TAKE A POSITION: Purchase securities; usually as a long-term investment.

TAKEDOWN: Normally, the largest component of the spread on a municipal bond issue, similar to a commission, which represents the income derived from the sale of the securities. If bonds are sold by a member of the syndicate, the seller is entitled to the full takedown (also called the “total takedown”); if bonds are sold by a dealer which is not a member of the syndicate, such seller receives only that portion of the takedown known as the concession or dealer’s allowance, with the balance (often termed the “additional takedown”) retained by the syndicate.

TAKEOVER: Usually a hostile change in the controlling interest of a corporation with a new management team; typically financed by debt, as in a leveraged buyout (LBO).

TANGIBLE ASSETS: Assets that exist in physical space.

TAPE: Older reporting services for securities prices; stock or ticker tape; now in electronic format.

TARGET COSTING: Services or products designed and produced with costs below predetermined levels.

TARGET COMPANY: A firm about to be acquired, usually in a hostile manner with debt financing.

TARGET PRICE: A price level for healthcare services that suggests a minimum price per unit of output.

TARIFF: Tax imposed on imported goods.

Taxable income: All income after adjustments and allowances subject to taxation; corporate or personal.

TAX AVOIDANCE: Legal steps to reduce taxation.

TAX BASIS: The accounting cost of an asset, adjusted for depreciation and/or improvements used for gain or loss determinations upon liquidation.

TAX CREDIT: A direct reduction in tax liability; one for one.

TAX DEDUCTION: A deductible tax expense at some pro-rated amount.

TAX DEFERRED: The absence of taxation until maturity, receipt, or disposition for profit.

TAX EQUIVALENT YIELD: Pre-tax yield of an equivalent tax-free investment.

TAX EVASION: Illegal steps used to reduce or eliminate taxation.

TAX EXEMPT: Free from any taxation liability; without tax.

Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA): Legislation that established target rate of increase limits on reimbursements for inpatient operating costs per Medicare discharge. A facility’s target amount is derived from costs in a base year updated to the current year by the annual allowable rate of increase. Medicare payments for operating costs generally may not exceed the facility’s target amount. These provisions may still apply to hospitals and units excluded from PPS.

Tax Identification Number (TIN): The number used to identify an individual or business for federal income tax purposes. This would be an individual’s Social Security number (SSN).

TAX SHIELD: Expense that decreases taxable income (such as non-cash depreciation), without disbursement.

taxable income: Gross income minus certain deductions and exemptions, from which the income tax due is determined.

taxable year: A period of time for which a report is to be made by a person or business of income received allowable deductions, etc., for income tax purposes. This is generally a calendar year for individuals, but may be another acceptable 12-month period (fiscal year) for businesses. A taxpayer on the cash basis is required to include items in gross income in the taxable year received; a taxpayer on the accrual basis is required to include items in gross income in the taxable year they accrue.

Tax-deferred annuity (TDA) or 403(b):  This typically is a defined contribution plan available to teachers, doctors, nurses, hospitals, clinics and not-for-profit healthcare organizations. An organization must sponsor the plan. Once sponsored, insurance companies offer annuities through the company. Employees then select which insurance company will receive their contributions. The contributions are almost always on a pre-tax basis.

TAX EXEMPT BOND: Bond issued by a state or municipality whose interest payments (but not profits from purchase and sale) are exempted from federal taxation; many hospital bonds are municipal bonds.

TAX EXEMPI’ED SECURITIES: Obligations issued by a state or municipality whose interest payments (but not profits from purchase and sale) are exempted from federal taxation. The interest payment may be exempted from local taxation, too, if purchased by a state resident; usually public hospitals and clinics.

TAX PREFERENCE ITEMS: A type of income or deduction that qualifies for preferential tax treatment. Examples include that portion of long-term capital gains that are not taxed; accelerated depreciation; depletion; intangible drilling costs; tax-free interest received on certain municipal bonds known as Alternative Minimum Tax (AMT bonds.

TAX SHELTER: The ability to educe, defer or avoid tax.

TAX SHIELD: An investment that reduces the amount of income tax owed.

TAX SWAP: The sale of securities at a loss and the simultaneous purchase of similar securities. By creating a loss, the tax swap reduces the investor’s current tax liability. The tax swap may also serve purposes similar to those of other types of swaps.

TAXABLE EQUIVALENT YIELD: The interest rate that must be received on a taxable security to provide the holder the same after-tax return as that earned on a tax-exempt security. Because interest earned on municipal securities is not subject to federal income taxation, a tax-exempt security does not have to yield to a holder as much as a taxable security to produce an equivalent after-tax yield; this differential is attributable to the effect of the tax liability incurred by the holder if it held a taxable security. The taxable equivalent yield varies according to the holder’s marginal federal income tax bracket, and, where applicable, any state or local tax liability as well.

TEASER RATE: Temporary and/or artificially low or high, interest-rate, to induce a sale.

TECHNICAL ANALYSIS: An approach to market theory stating that previous price movements, properly interpreted, can indicate future price patterns, too. A Technical Analyst watches the market, not the company, and is sometimes called a chartist, for obvious reasons.

TED SPRAD: Commodity money price difference that occurs with interest rates between European denominated dollars (Euros) and US Treasury bills; slang for Treasury over Euro Dollars.

TEENYO: Slang tem for 1/16th of a point; Steenth.

TEN-BAGGER: An equity that grows in price by a factor of ten.

TEMPORARY ACCOUNT: Expense and revenue accounts that related to a specific accounting period and closed at the end of the period.

TENDER: To surrender shares.

TENDER OFFER: The offer to buy stock directly from its shareholders and usually over the opposition of management.

TERM: A specific period of time.

TERM BOND: A bond with maturity such that substantially all the issue is due at the same date. This is as opposed to a serial bond, although some bonds have serial and term maturities.

TERM ISSUE: An issue of municipal securities that has a single stated maturity.

TERM LOAN: A type of long term financing usually paid of within a decade.

TERMINAL VALUE (tv): Residual value at the end of fixed or variable maturity, the sale of an asset, or the salvage price of a piece of equipment.

Termination: To mature, end or complete.

THE THIRD MARKET: Over-the-Counter (OTC) transactions in listed stocks.

THETA PRICING MODEL: A mathematical pricing model for derivatives.

THIN ISSUE: A small number or volume of securities transactions.

THIN MARKET: A securities market place exchange with few offers to sell and few bids to buy.

THIRD MARKET: OTC for listed exchange securities.

THIRD PARTY PAYER: An intermediary like an insurance or managed care company, Medicare or Medicaid that agrees o pay for medical services on behalf of a patient.

THIRTY DAY WASH RULE: IRS rule that precludes securities loss sales to offset tax losses if made within 30 days of equivalent securities purchase.

TICK: A transaction (up or down) on the stock exchange.

TICK TEST: A stock market trading curb that allows only zero-plus and up-tick transactions in the face of a falling market.

TICKER SYMBOL: Stock symbol used on the ticker tape, in newspapers, or electronically, etc.

Tiered Interest Rate: An interest rate structure that allows for increased interest based on a higher tiered rate and increased account balance for that rate.

TIGHT MARKET: Narrow bid offer prices in a market, security, financial product or other commodity.

TIGHT MONEY: A dearth of credit in an economic milieu; restricted money supply.

TIME PERIOD CONCEPT: Suggests that accounting statements be reported at regular intervals.

TIME PREMIUM: The amount of money the price of an option exceeds is intrinsic value.

TIME VALUE: The part of an option premium that reflects the remaining life of the option. The more time that remains before the expiration date, the higher the premium, because there is more time available for the value of the underlying security to move up or down.

TIME VALUE OF MONEY: Money received in the present can earn money over a period of time (making the amount ultimately larger than if the same initial sum were received later). Therefore, both the amount of investment return and the length of time it takes to receive that return affect the rate of return (i.e., the value of the return).

TIME WEIGHTED RETURN: Performance measurement of capital at work void of additions, withdrawals or other timing differences.

TIMES DIVIDEND EARNED RATIO: Stock earnings divided by preferred dividend requirements.

TIMES INTERST EARNED RATIO (TIER): A financial ratio that suggests how much there is in profit before interest, for every dollar in interest expense [(excessive revenue over expenses + interest expense) / interest expense)].

TIP: A voluntary payment that exceeds formal cost and usually for extra-ordinary service; or gratuity.

Title: Written evidence that proves the right of ownership of a specific asset; legal owner.

tITle Insurance: Protection against financial loss resulting from legal defects in the title of an asset.

Title Search: An investigation into the history of ownership of an asset to check for liens, unpaid claims, restrictions or problems, to prove that the seller can transfer free and clear ownership.

TIP: Information, usually financial, that is exchanged between parties and is not usually available to the public.

Token Payment: A form of co-payment, usually a nominal payment, made by the patient for a service or supply item.

TOMBSTONE AD: An ad announcing securities offering which merely gives the size of the offering, the name of the firm or underwriting group from which a prospectus is available, and a disclaimer that the ad is not an offer to sell nor a solicitation of an offer to buy.

TON: Slang for $100 million dollars.

TOP-DOWN: Investing method that first identifies general economic trends, then industries, then specific companies and finally ingestible securities.

TOP OUT: Maximum securities price plateau.

TOTAL ASSETS TURNOVER RATIO (TATR): Total revenues / total assets.

Total Budget: Otherwise known as a “global” budget, a cap on overall health spending.

TOTAL COST: Sum value of all inputs used to produce healthcare goods or services, aver a given time period, or the sum of al fixed and variable costs; Holding costs, plus Transaction costs.

TOTAL DIRECT AND OVERLAPPING DEBT: Total direct debt plus the issuer’s applicable share of the total debt of all overlapping jurisdictions.

TOTAL EXPENDITURE: The number of purchased units of healthcare product, over a given time period, multiplied by the price of the product, equals the total revenue to sellers.

Total Margin: A measure that compares total hospital revenue and expenses for inpatient, outpatient, and non-patient care activities. Total margin may be calculated by subtracting total expenses from total revenue, and dividing by total revenue. Transfer Payment: A payment (transfer of money) from one group to another without use of any physical resource.

Total return: Measure of performance that includes capital appreciation (or depreciation) and reinvestment of dividends.

TOTAL RETURN CONCEPT: Income determining philosophy which includes interests, dividends and capital appreciation.

TOTAL REVENUE: Medical service price, times medical service or product quantity.

TOTAL UTILITY: Complete satisfaction enjoyed from consuming a healthcare product or medical service.

TOUT: To promote a specific security or company.

TRACE: The accounting ability to assign a cost or expense to a particular cost object (heart surgery for patient X).

TRADE: To purchase or sale goods, products, securities and/or services, etc: the process of a transaction exchange.

TRADE CREDIT: Credit gained from the purchase of products or services.

TRADE CURB: Temporary suspension of trading activities; halt.

TRADE DISCOUNT: Price reduction for the purchase of products or services.

TRADER: One who frequently sells and buys securities.

TRANCH: A multi-class security; a slice.

TRANSACTION: Recordable event that affects the financial position of a company.

Transaction Costs: All fees such as brokerage commissions or mutual fund fees, which are charged when acquiring or selling financial or other assets.

TRANSACTIONAL NOTE: A short-term and unsecured loan, for a specific transaction or event.

TRANSFER AGENT: An agent responsible for the registration of security shareowner’ names on the company records and the proper re-registration of new owners, when a transfer of stock occurs.

TRANSIT FLOAT: Elapsed time between check deposit and funds availability.

TREASURER: Corporate official responsible for receipt, custody, release and reporting of funds, and securities market maintenance.

TREASURY BOND OPTION: An option representing the right to buy (call) or sell (put) $100,000 principal amount of each specific bond listed.

Treasury securities: Treasury securities are issued by the Federal government, and are available in several types:

  • Treasury bills: Purchased at a discount from face value, treasury bills are sold in a minimum increment of $10,000, with multiples of $5,000 available above the minimum. Treasury bills are auctioned to the highest bidder, so the interest is not a set amount. Rather, it varies, depending on how high the bid. Treasury bills can be purchased through a commercial bank, a brokerage firm, or any Federal Reserve Bank.
  • Treasury bonds: Issued in denominations of $1,000 to $1,000,000 or more, treasury bonds mature in 11 to 30 years. Both notes and bonds may be purchased through commercial banks and brokerage firms or directly from the Federal Reserve Bank. Bills, notes, and bonds are very liquid and can be readily sold. Bond funds have minimum investment requirements, which vary according to the fund’s parameters. Thirty year Treasury bonds were discontinued in 2001 and reinstituted on February 9, 2006.
  • Treasury notes: Treasury notes mature in 2 to 10 years and interest is paid semi-annually. Longer-maturing notes are sold in lots of $1,000 to $100,000 or more.

TREASURY STOCK: Shares of stock reacquired by the corporation through purchase or donation, which are not used for dividend, voting, or earnings calculation purposes.

TREND: Financial pattern or direction; up or down movement’ bullish or bearish.

TREYNOR INDEX: A risk adjusted measure of financial performance the correlates the return-in-excess of the risk-free-rate of return, by a portfolio’s systemic risk-of-the-market.

TRIAL BALANCE: A low output point in the business cycle.

TRIN: A measurement of stock market strength using advance/decline ratios and volumes.

TRIPLE WITCH: Simultaneous expiration date for options, index options and futures contracts; usually the third Friday in March, June, September and December.

TROUGH: To bottom out; as in securities price level or business cycle.

TRUE INTEREST COST (TIC): Also known as “Canadian Interest Cost.” Under this method of computing the borrowing issuer’s cost, interest cost is defined as the rate, compounded semi-annually, necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the new issue securities. TIC computations produce a figure slightly different from the net interest cost (“NIC”) method since TIC considers the time value of money, while NIC does not.

Trust: A legal arrangement whereby control over property or funds is transferred to a trustee (a person or an organization) for the benefit of a designated person (the “beneficiary”). Trusts are created for a variety of reasons, including tax savings and improved asset management.

TRUST RECEIPT: A certification that the borrower holds goods in trust for a lender.

Trustee: An appointed person or organization that manages the contents of a trust. The commercial banking institution charged with upholding the terms and conditions of a bond’s indenture.

Trustor: The creator of a trust, the person who transfers assets to a trust, or a person who encumbers his or her interest in real property by a transfer to a trustee under a deed of trust.

Truth-In-Lending Act: A federal law requiring a disclosure of credit terms using a standard format (also known as Regulation Z). This is intended to facilitate comparisons between the lending terms of different financial institutions.

TURKEY: A poor investment.

Turnaround: Positive reversal in the performance of a company.

TURNOVER: Quantity in a given time period that an item is represented by another exact or similar item.

TWENTY BOND INDEX: General tracking index of 20 municipal bonds, 20 year maturities, with equivalent credit ratings.

TWENTY-DAY COOLING OFF PERIOD: A period of twenty calendar days following the filing of a registration statement with the SEC, during which the SEC examines the statement for deficiencies, the issuing corporation negotiates with an underwriting syndicate for a final agreement, and the syndicate prepares for the successful distribution of the impending issue. The final day of the period is normally considered the effective date, unless otherwise stated by the SEC.

TYPE OF OPTION: Designation to distinguish between a put and a call option.

TWISTING: Inducing the termination of a health or life insurance policy in order to purchase a new one, and/or the rapid turnover of securities to generate sales commissions for the agent or broker.

TWO-SIDED MARKET: A market with firm bid and ask prices; often requiring a specialist to maintain a fair and orderly market. 


12b-1 Fee: The annual fee charged by a mutual fund to cover distribution expenses, such as marketing, servicing or advertising

12b-l PLAN: Named after a section of the Investment Company Act of 1940 which permits mutual funds to levy an asset based sales charge to cover advertising and distribution costs. The NASD Rules of Fair Practice limit these charges to. 75 %-of assets and do not permit a fund to refer to itself as “no-load” if the charge is higher than .25%. These charges must be reviewed by the fund’s Board of Directors quarterly and approved annually. The plan may be discontinued by a majority vote of the fund’s shareholders OR that part of the Board represented by outside directors.

U-Z Terminology


UB-92 Uniform Bill 1992: Bill form used to submit hospital insurance claims for payment by third parties. Similar to HCFA (CMS) 1450 and 1500, but reserved for the inpatient component of health services.

UCR REDUCTION SAVINGS: The dollar amount or economic differential saved between the actual medical charges submitted for patient care, and the allowed charges according to some proscribed payment schedule; usual, customary and reasonable. 

ULTRA-VIRES: Corporate actions unauthorized by its charter.

un-accrued: Most often describes income resulting from healthcare or other business payments received but not yet due.

unallocated claim expense: Expenses of loss adjustment that a health insurance company or other company incurs but cannot charge specifically to any single claim, such as claim department salaries and office overhead.

UNBUNDLED: Itemizing or fragmenting each component of a medical or healthcare service or procedure separately. This can often result in higher overall costs.

Uncollected Funds: Funds that have been deposited in an account or cashed against an account by a check that has not yet been cleared through the check collection process and paid by the drawee bank. Temporary holds are sometimes placed on their customer’s uncollected funds. Funds are unavailable for withdrawal until the time period the hold expires.

UNCOLLECTIBALE ACCOUNTS: Accounts and ARs that will not be paid or satisfied in full.

UNCOLLECTABLE ACCOUNTS EXPENSE: The cost to a seller of extending credit in ARs terms.

UNCOVERED CALL WRITER: A call writer is uncovered (naked) when that writer does not hold a long call of the same security class, with an equal or lower exercise price, or does not own an equivalent number of securities shares to the short position.

Uncovered Expense: A cost incurred by the patient which his or her insurance policy or HMO contract does not cover, and was unknown previously.

Uncovered option: A short securities option position that is not fully collateralized if notification of assignment should be received. A short call position is uncovered if the writer does not have a long stock position to deliver. A short put position is uncovered if the writer does not have the financial resources available in his or her account to buy the stock.

UNCOVERED PUT WRITER: A put writer is uncovered (naked) when that writer does not hold a long put of the same securities class, with an equal or higher exercise price.

UNDERCAPITALIZED: A healthcare or other firm with inadequate equity or debt financing for operations.

UNDERLYING SECURITY: The security underlying an option contract against which a call or put is traded.

UNDERMARGINED ACCOUNT: A credit (margined) securities brokerage account that has fallen below minimum equity reserve requirements.

UNDERVALUED: Securities selling at a low fair market value price; usually below liquidation value levels.

UNDERWRITER: A middleman between a securities company issuer and the public. There is usually an underwriting syndicate to limit risk and commitment of capital. There may also be contracts with selling groups to help distribute the issue for a concession. In the case of mutual funds, underwriters may also be known as a sponsor or distributor. Investment bankers also offer other services, such as advice and counsel on the raising and investment of capital; investment banker.

UNDERWRITER’S RETENTION: The percentage of a total securities issue to which each member of a securities syndicate is entitled and which is distributed to customers.

UNDERWRITER’S SYNDICATE: A group of investment bankers and firms that tout and/or sell various securities.

UNDERWRITING AGREEMENT: The contract between an investment banker and a corporate healthcare or other issuer, containing the final terms and prices of the issue. It is normally signed either on the evening before or early in the morning of the initial public offering date (effective date).

UNDERWRITING COMPENSATION (SPREAD): The profit realized by a securities underwriter that is equal to the difference between the price he paid to the issuer and the retail price of the public offering.

UNDERWRITING PERIOD: The period of time the underwriting process is considered to be continuing and during which certain requirements of Municipal Securities Rule Board regulation are applicable. MSRB rules define the “underwriting period ” as commencing at the time of the first submission to the underwriter(s) of an order for the new issue securities or the purchase of the new issue from the issuer, whichever occurs first, and ending at the time of the delivery of the securities to the underwriter(s) by the issuer or the sale of the last of the security by the underwriter(s), whichever occurs last.

underwriting profit (or loss): The profit (or loss) received from insurance or reinsurance premiums, as contrasted to that realized from investments. Also, the excess of premiums over claims paid and expenses (profit), or the excesses of claims paid and expenses over premiums (loss).

UNDIGESTED SECURITIES: Newly issued securities that remain unsold because of poor demand.

UNENCUMBERED: Assets free of legal claims or liens.

UNDIVIDED ACCOUNT (EASTERN ACCOUNT): A method for determining liability stated in a securities underwriting agreement in which each member of the underwriting syndicate is liable for any unsold portion of a securities issue according to each member’s percentage participation in the syndicate.

unearned income / revenue: An individual’s income derived from investments, as opposed to salary or wages.

UNFAVORABLE VARIANCE: When actual revenues and expenses, are lower and higher than expected.

UNFUNDED PENSION PLAN: A traditional legacy defined benefit plan (DBP) for retirement that is not fully funded by its sponsoring corporation; may be partially reinsured by the Pension Benefit Guarantee Corporation (PBGC).

UNIFORM GIFT/TRANSFER TO MINORS ACT (UGMA / UTMA): Securities or gift / transfers to a minor held in a custodial account and managed by an adult for the benefit of the minor.

UNIFORM COMMERCIAL CODE (UCC): A most state-wide, not federal, legal codification of commerce involving tangible and intangible business transactions.

UNIFORM PRACTICE CODE (UPC): A code established and maintained by the National Association of Securities Dealers (NASD) Board of Governors that regulates the mechanics of executing and completing securities transactions in the OTC market between members.

UNIFORM PRACTICE COMMITTEE: A National Association of Securities Dealers district subcommittee that disseminates information and interpretations landed down by the Board of Governors regarding the Uniform Practice Code (UPC).

UNISSUED STOCK: That portion of authorized stock not distributed (sold) to investors by a newly chartered corporation.

UNIT INVESTMENT TRUST (UIT): Redeemable shares of a professionally selected portfolio of securities.

UNIT OF BENEFICIAL INTEREST (UBI): Shares of a Unit Investment Trust.

UNIT SHARE INVESTMENT TRUST (USIT): One prime and one score portion of a Unit Investment Trust (UIT).

UNIT OF TRADING: The usual number of shares for a given securities financial transaction.

unlimited personal liability: The use of personal, non-corporate assets, to satisfy a debt or other liability.

UNLISTED SECURITIES: Securities not formally listed on a securities exchange.

Unrealized gain or loss: A gain or loss on paper that is not realized until an asset, security or investment is sold.

UNDERSECURED CLAIM: A short-term loan that is partially-back by assets or collateral.

UNSECURED LOAN / BOND: A short-term or long-term loan that is not back by assets or collateral.

UNIT ELASTIC DEMAND: Price when the elasticity of healthcare demand equals one unit.

UNIT ELASIC SUPPLY: Price when the elasticity of healthcare supply equals one unit.

UNITED STATES PER CAPITA COSTS: Per head national Medicare average expense per enrollee.

UNPAID DIVIDEND: A dividend of a corporation that has been declared but not distributed to shareholders.

UNREALIZED APPRECIATION / DEPRECIATION: The amount by which the market-value of portfolio securities pr other holdings on a given date exceeds or falls short of their cost basis.

UNRELATED BUSINESS INCOME: Income not related to the primary mission of a firm, entity or corporation.

UNSYSTEMATIC RISK: The business risk associated with individual securities rather than the whole marketplace (systematic or systemic risk).

UPGRADE: An increase in the quality rating of a security; especially bonds.

UPSET PRICE: A seller’s rock bottom and minimum auction price bid for securities.

UPSTAIRS MARKET: A securities transaction completed without the intermediation of a formalized stock exchange.

USEFUL LIFE: Physical assets that break-down, deteriorate or can be used-up according to some predictable time period.

Usual, Customary and Reasonable (UCR): Health insurance plans pay a physician’s full charge if it is reasonable and does not exceed his or her usual charges and the amount customarily charged for the service by other physicians in the area.

usury: Excess rate of interest over the legal rate charged to a borrower for use of money. Each state has its own definition of the exact rate and conditions that result in usury.

UTILITY: Satisfaction patient-consumers receive from the healthcare or other products, goods or services they acquire.

UTILITY THEORY: The relationship between money, risks and happiness.

UTILIZATION: Amount of a healthcare resource divided by the amount available for use by patients.


value: The worth of anything, often expressed in terms of money, but not necessarily so. The present worth of all the rights to future benefits arising from ownership of the thing valued.

VALUE ADDED: The extra worth that a healthcare or other entity adds to intermediate products, goods or services and measured by the difference between the initial and later market value.

VALUE ADDED TAX: A use or consumption surcharge; levy.

VALUE CHAIN: The sequence of activities that add value to a healthcare firm’s products, goods or services.

VALUE CREATION: Net Present Value (NPV).

Value Stocks: Stocks that are considered to be inexpensive based on measures relative to their market value, such as current earnings or total assets. Often, these stocks are considered out of favor or “undervalued” by the market for some reason; opposite of overvalued.

VALUATION: A procedure whereby a securities certificate or coupon that has been torn or otherwise damaged (“mutilated”) is endorsed as being a valid or binding obligation of the issuer. Validation of damaged certificates is normally done by the issuer or its agent (e.g., the paying agent, trustee, registrar or transfer agent); validation of damaged coupons can also be done by a commercial bank.

VALUATION: The formal process of determining the worth of a healthcare or other business entity at a specific point in time. The act or process of determining fair-market-value often used as synonymous with appraisal.

VALUATION APPROACH: A general method of business value determination using one or more conventional economic methods.

VALUATION DATE: The specific point in time when an Opinion of Value is given.

VALUATION METHOD: A specific method to determine healthcare or other business entity value.

Valuation SALES Terms:

  • The asking sale price is often arbitrary, difficult to substantiate, and typically cut by as much as half during negotiations.
  • The realistic sale price is one that both buyer and seller believe is fair.
  • The friendly sale price is usually used for associates, partners, or other colleagues.
  • The creative sale price is derived from creative financing, such as when the practice provides the down payment.
  • The emotional sale price is either an inflated price paid by a motivated buyer or a depressed price accepted by a motivated seller.
  • The fair-market sales value is the standard used by most appraisers to derive a reasonable value for a practice.
  • The business enterprise sale of a practice equals a combination of all assets (tangible and intangible) and the working capital of a continuing business.
  • The value of owner’s sale equity the combined values of all practice assets (tangible and intangible), minus all practice liabilities (booked and contingent).

VALUE HEALTCARE PURCHASING: The bulk purchases of medical supplies, equipment, goods or services in order to harvest economy of scale (bulk) cost savings.

Value investing: A style of investing that searches for undervalued companies and buys their stock in hopes of sharing in the future gain when other analysts discover the company.

Value stock: A stock trading below its historical value. If the stock is a large capitalization stock in a viable industry that has a relatively stable history, it usually can be expected to revert back to its prior value.

VARIABLE: A dollar amount or quantity that can have more than a single value.

Variable Annuity: A tax-deferred contract issued by an insurance company that offers a choice of investment options, allowing purchasers to choose from a number of sub-accounts with various investment objectives. Variable annuities can offer diversification, flexibility and estate benefits, and they are often used as a supplement to 401(k) and IRA plans, because contribution limits are much less restrictive.

VARIABLE BUDGET: A flexible budget.

VARIABLE COST: Medical or health care services expense that remains the same per unit, but change with variations in activity over the relevant range.

VARIABLE LABOR BUDGET: Labor expense projection that changes over time with overtime and work outages.

VARIABLE INTEREST RATE BOND: Usually a long term bond whose interest rate changes with shorter term interest rate fluctuations.

VARIABLE INPUT: A healthcare or other input whose quantity can change.

Variable Rate: An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly.

variance: The differences obtained from subtracting actual results from expected or budgeted results.

VARIANCE ANALYSIS: Research into, and the study of, the differences between planned healthcare input quantities, and actual output quantities.

VEGA MODEL: A type of pricing model for derivatives.

VELOCITY OF MONEY: The rate at which the money supply is used to make transactions for final gods and services.

VENTURE CAPITAL: Private capital supplied for a risky start-up business; usually in return for an equity share of the corporation.

VERTICAL ANALYSIS: A method of financial statement analysis that compares line item percentages rather than absolute amounts.

VERICAL INTEGRATION: A healthcare entity that owns hospitals, clinics, medical practices, and/or the DME vendors used in various stages of patient care; down-line integration.

VERIFIABILITY: To confirm, certify or endorse.

VERTICAL MERGER: The union of a healthcare entity with an input supplier.

Vesting: A timing schedule for when pension benefits come irrevocably due.

VIRTUAL CORPORATON: Firms that conserve cash and limit financial risk by owning few assts and hiring few employees; internet based or electronic-healthcare firms.

VISIBLE SUPPLY: The total dollar volume of bond or debt based securities offered over the next 30 days. The visible supply, which is compiled and published by The Bond Buyer, indicates the near-term activity in the municipal market.

Volatility: A measure of the variability of security returns. Conventionally, volatility is defined as the annualized standard deviation of the logarithms of the asset’s returns. An important aspect of volatility is that it measures the variability of returns and not the deviation.

VOLUME: The quantity or number of securities traded over a given time period.

VOLUNTARY ACCUMULATION PLAN: An informal mutual fund investment program allowing a customer to arrange purchases in frequency and numbers of dollars at his own choosing, yet providing benefits normally available only to larger investors. Sales charge percentage requirements are constant throughout the life of the plan and therefore, the plan is sometimes called a Level Charge Plan.

VOTING CONTROL: The defacto control of a business, corporation or healthcare enterprise.

VOTING RIGHT: Privilege attributed to most common stocks which allow a pro-rate input into corporate decision making.

VOUCHER: A document or receipt that authorizes a cash or asset disbursement.

VOUCHER REGISTER: A list or record of payment vouchers.

VOUCHER SYSTEM: Use of vouchers for payment of goods, products and services.

VULTURE CAPITALIST: Slang term for one who provides private capital for a risky start-up business; usually in return for a very large equity slice (ownership) of the corporation.

VULTURE FUND: A fund of depressed or below market rate securities or other assets.


WAGE: The price paid for human resources and labor.

Wage base: The wage base is the amount of gross earnings (employee) and or net earnings from self-employment (self-employed) to which FICA (Federal Insurance Contributions Act) and/or SECA (Self-Employment Contributions Act) is applied. The wage base is increased or inflation-indexed each year. This indexing is based on the increases in average total wages and is generally announced in November of the preceding year. For example, the wage base for the 1999 calendar year was $72,600. Therefore, an employee with a salary of $80,000 for 1999 had FICA tax of 7.65% withheld from the first $72,600 (ceiling) of his or her salary. The same ceiling applies to the employer contribution of 7.65%. The Medicare component (1.45%) is not subject to any ceiling, so both employee and employer continued to contribute Medicare tax (2.9% combined) for the entire $80,000 of the employee’s salary.

WAGE PUSH INFLATION: The inflation induced by higher human resource employment costs (wages).

WALLAPER: Worthless, or near worthless securities.

WALl STREET: Slang term for the financial district in Manhattan, New York.

Warrants: Certificates that allow the holder to buy a security at a set price, either within a certain time period or in perpetuity. Warrants are usually issued for common stock, at a higher price than current market price, in conjunction with bonds or preferred stock as an added inducement to buy. An inducement attached to new securities giving the purchaser a long-term (usually five to ten years) privilege of subscribing to one or more shares of stock reserved for him by the corporation from its unmissed or treasure stock reserve.

WASH SALE: When an investor sells a security at a loss, he can use that realized loss to offset a realized gain in order to reduce his tax liability on that gain. If the seller reacquires that or a substantially identical security within a 30-day period prior to or after the sale, he will lose the tax benefit of that realized loss.

WASTING ASSETS: Physical assets that can break-down, deteriorate or can be used-up.

WATERED STOCK: Equities in overvalued corporations.

WEAK DOLLAR: USD (US Dollar) that has fallen in value against a foreign currency.

WEAK MARKET: Any market with declining prices and more sellers than buyers.

WEIGHTED AVERAGE COST OF CAPITAL (WACC): Mean cost of money determined by the percentage interest rate of cost of each class, in proportion to the total market value of an organization that each class represents; proportional interest rate cost share.

WEIGHTED AVERAGE MATURITY: Average cost, interest rate or data points based on the pro-rata share of the data.

WHEN, AS, AND IF ISSUED: A phrase used to describe the time period in the life of an issue of securities from the original date of the sale by the issuer to the delivery of the securities to, and payment by, the underwriter. Sales made during the “when, as and if issued” period (also called the “‘when-issued’ period”) are subject to receipt of the securities from the issuer by the underwriter in good form.

WHEN ISSUED CONTRACT: A delivery contract involving securities (stocks or bonds) that have been proposed for distribution but not yet issued; the date of delivery is set for some time in the future by the National Association of Securities Dealers (NASD) Uniform Practice Committee (UPC) or the appropriate stock exchange, as the case may be.

WHIPSAWED: Volatile up and down price movements of securities, markets, businesses, or assets.

WHISPER NUMBERS: Unofficial projected corporate earning estimates by Wall Street analysts; Wall Street financial performance gossip.

WHISPTER STOCK: A company rumored to be an impending corporate takeover target.

WHITE KNIGHT: Friendly investor sought to save a company from a hostile takeover.

WHITE MAIL: Below market stock sale to a friendly party; corporate anti-takeover method.

WHITE SHOE FIRM: A traditional, blue-blooded and elite, broker-dealer, legal, accounting, advisory or investment banking firm; upper crust.

White squire: A friendly (white knight) who acquires less than a majority interest in a company to thwart a hostile take-over attempt.

WIDE OPENING: A very large security spread.

WIDOW AND ORPHAN STOCK: A traditionally safe and secure stock that usually pays dividends.

WILSHIRE INDEX: An equity stock index composed as a surrogate for 5,000 firms.

Willingness to Pay: The maximum amount of money that an individual is prepared to give up to ensure that a proposed healthcare measure is undertaken.

WINDFALL: A sudden and large profit.

WINDOW DRESSING: Portfolio manager year-end buying or selling for shareholder presentations.

wirehouse: A stock brokerage firm; usually retail or boutique and/or national or regional in nature.

Wire Transfer: An electronic transfer of funds from one financial institution to another. Wire Transfers require the routing transit number, dollar amount, account number and name of the account owner(s).

WITHDRAWAL PLAN: Arrangement provided by many open-end mutual fund companies by which investors can receive monthly or quarterly payments in a designated amount, which may be more or less than actual investment income.

WITH-HOLD: The portion of the monthly capitation payment to physicians withheld by the MCO or insurance plan until the end of the year or other time period to create an incentive for efficient care. The with-hold is at risk; i.e., if the physician exceeds utilization norms, he does not receive it. It serves as a financial incentive for lower utilization.

WITH-HOLDING: Securities regulations require all hot issues be distributed to the public in insubstantial amounts. If the issue is not a hot issue, members of the industry can buy shares of the new issue and will be filled in the last priority. However, if the issue is hot, meaning the supply is insufficient to meet the public’s demand, they cannot. If a member firm or representative tries to participate by reserving part of the new issue for themselves or other members they are guilty of withholding.

WITH-HOLDING ALLOWANCE: A budgeted or estimated with-holding amount.

WITH RECOURSE: The legal ability to place a claim or a creditor.

WORK: Conscientious industry and/or human physical or cognitive labor.

WORK SHEET: Columnar document that assists in the movement of trial balances to financial statements.

WORKABLE: A bid price at which a dealer states its willingness to purchase securities from another dealer. A dealer soliciting a “workable” often is working to satisfy a customer’s order to sell securities.

WORKING CAPITAL CYCLE: The activities of a healthcare or other business entity that include:

  • Securing cash;
  • Turning cash into medical and other resources;
  • Using resources for providing healthcare services;
  • Billing patients again to repeat the cycle.

working capital, net: Current assets minus current liabilities.

WORK-OUT: A trouble company taking measures to resurrect or restructure its financial and/or business operations.

WORK-OUT MARKET: In the Over-the-Counter (OTC) market, a range of prices quoted by a market maker when he is not certain that there is an existing market available, but he feels he can “work one out” within a reasonable period of time.

WRAP ACCOUNT: A discretionary brokerage securities account where all sales, administrative fees and commissions are included in an annual percentage-based management fee.

Write: To sell an option. An investor who sells an option is called the writer, regardless of whether the option is covered or uncovered.

WRITE-OFF: A bad debt expense; uncollected ARs.

WRITER OF AN OPTION: An investor who grants option privileges to a buyer in exchange for the premium.

WRITTEN-DOWN: Net book value of corporate or business assets after depreciation and amortization expenses.


X: A stock that is trading ex-dividend; without its dividend payments.

XR: A stock that is trading ex-rights; without its terms and conditions (i.e., voting) or other rights.

XW: A stock that is trading ex-warrants; without warrants as an enticement to buy (sweetener).


YARD: One billion units of a currency.

YELLOW SHEETS: Pink-sheet bid and ask OTC price listings for a market-maker in corporate bonds.

YIELD (RATE OF RETURN): The dividends or interest paid by a company on its securities, expressed as percentage of the current price or of the price of original acquisition.

Yield (7-Day or 30-Day): The annualized current rate of mutual fund investment income calculated by a Securities and Exchange Commission formula that includes the fund’s net income (based on the yield to maturity of each bond it holds), the average number of outstanding fund shares during the 7-day or 30-day period shown, and the maximum offering price per share on the last day of the period.

YIELD CURVE: Curvilinear relationship between time to maturity, and yield, for a specific asset class. A graph that plots market yields on securities of equivalent quality but different maturities, at a given point in time. The vertical axis represents the yields, while the horizontal axis depicts time to maturity. The term structure of interest rates, as reflected by the yield curve, will vary according to market conditions, resulting in a variety of yield curve configurations:

  • Normal or Positive Yield Curve – Indicates that short-term securities have a lower interest rate than long-term securities.
  • Inverted or Negative Yield Curve – Reflects the situation of short-term rates exceeding long-term rates.
  • Flat Yield Curve – Reflects the situation when short- and long-term rates are about the same.

YIELD SPREAD: Yield differential between different (bond) debt securities.

YIELD-TO-CALL: The rate of return to the investor earned from payments of bond (debt) principal and interest, with interest compounded semi-annually at the stated yield, presuming that the security is redeemed prior to its stated maturity date. (If the security is redeemed at a premium call price, the amount of the premium is also reflected in the yield.)

Yield to maturity: The yield earned on a bond from the time it is purchased until it is redeemed.

YO-YO- STOCK: An equity whose price fluctuates in an often wild manner.


ZERO BASED BUDGETING: A budgeting method that requires accountability for the line item existence and funding needs of existing and new health or other services programs.

Zero coupon bond: A bond that pays both principal and interest at maturity. These debt instruments pay interest only at maturity, as compared with semi-annual interest payments on treasuries. Zero coupon bonds generate no coupon payments whatsoever throughout the life of the security. They are sold at a discount to the face value of the bond, and as the maturity date moves closer, the price of the bond will move toward par. Therefore, the investment return comes entirely from the price increase between the time of purchase and the maturity date (or redemption date, if it is sold prior to maturity). The coupon income is not reinvested and thus the potential income derived from reinvestment is not considered in valuing the zero’s investment performance. Zero coupon bonds can be applied in a variety of ways:

  • STRIPS are an acronym for Separate Trading of Registered Interest and Principal Securities. STRIPS consist of either the interest or principal on U.S. treasury bonds. They are direct obligations of the U.S. government and are considered the safest and most liquid of all zero coupon bonds. They have maturities from 6 months to 30 years.
  • CATS are an acronym for Certificates of Accrual on Treasury Securities. These are physical certificates representing cash flows of U.S. treasury bonds that are held in a separate trust. Because CATS represent cash flows of treasury bonds, they are considered to be backed by the government. They have maturities from 1 to 22 years.

ZERO-MINUS TICK: A transaction on the Stock Exchange at a price equal to that of the preceding transaction but lower than the last different price.

ZERO-PLUS TICK: A transaction on the Stock Exchange at a price equal to that of the preceding transaction but higher than the last different price.

ZERO PREMIUMS: Medicare managed care plans in which there is no extra premium payment for a member above the monthly Medicare Part B payment for all beneficiaries.

ZERO SUM GAME: A matching set of competitive winners and losers.

ZETA: A type of volatile derivative pricing model; vega, kappa, omega or sigma.

ZOMBIES: Insolvent or bankrupt companies that are still in operation (i.e., dot com zombies).


12b-1 FEES: The fees of no load mutual funds for markets and advertising.

  • 83(b) election: An income tax election that allows a healthcare or other employee who receives employer stock under a tax-deferred arrangement to report income that results from the receipt of such stock in the year the stock is received.

401(k) plan: An employee benefit plan that allows employees to defer income taxes on a portion of compensation that is paid into a savings trust that meets certain qualifications under the Employee Retirement Income Security Act (ERISA).

  • 403(b) plan: A tax-deferred savings arrangement, similar to a 401(k) plan, that is available to employees of nonprofit hospital, clinics, healthcare, schools and educational organizations

10-K REPORT: A report that public firms must file annually with the Securities Exchange Commissions (SEC).

10-Q REPORT: A report that public firms must file quarterly with the Securities Exchange Commissions (SEC).

8-K REPORT: A report that public firms must file with the SEC reporting changes that may affect the value of its securities.

13-D REPORT: A report that an individual who acquires five percent of a public company must file with the Securities Exchange Commissions (SEC).

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3 thoughts on “② Free E-Dictionary of Health Economics and Finance

  1. Health Finance Glossary

    Activities of Daily Living (ADLs) – Common daily tasks that, when they are unable to be performed, can serve as a “trigger” to obtain benefits from a long-term care insurance policy. Common ADLs include bathing, dressing, toileting, continence, and eating.

    Any-Occupation Disability Insurance – The most restrictive and least costly type of disability insurance policy that pays benefits only when the insured is unable to engage in any type of employment. Policyholders are not considered disabled unless there is no type of work they can do.

    Basic Medical Coverage – A health insurance policy that covers expenses such as a hospital room, hospital services, surgical care, anesthetics, medical equipment and, sometimes, outpatient care. Medical expenses are covered as either a service (percentage) or indemnity (fixed sum) benefit. Basic health insurance policies generally consist of three parts in combination: hospital insurance, surgical insurance, and physician expense insurance.

    Benefit Coordination – Clause in a health insurance contract designed to prevent people from collecting from two policies for the same expense. The total claim cannot exceed 100% of the cost and a secondary plan makes payment only after the primary plan has paid its portion.

    COBRA – An acronym for the Consolidated Omnibus Reconciliation Act, a 1986 law that provides an option for continued health insurance upon separation from an employer. The only exception is workers who are fired for “gross misconduct.” Employers with 20 or more workers must offer to continue health benefits for departing workers for up to 18 months. Workers may be required to pay up to 102% of the cost of premiums (the full cost plus a 2% administrative surcharge). Workers have 63 days from their date of separation to apply for COBRA benefits.

    Consumer-Driven Health Plans (CDHPs) – Insurance plans designed to make users feel the effects of health-care expenses in order to contain costs. CDHPs typically consist of a high-deductible managed health care plan combined with either an employer-funded health reimbursement account (HRA) or a tax-deductible health savings account (HSA).

    Coinsurance – The amount (usually stated as a percentage; e.g., 20%) of a claim that an insured person is expected to pay out-of-pocket up to the stop-loss limit. A common split found on health insurance policies is that the policy pays 80% of expenses with the insured paying (i.e., coinsuring) the remaining 20%.

    Copayment – The amount (usually stated as a dollar amount; e.g., $5 or $10) that an insured person must pay out of pocket for a medical service (e.g., doctor’s office visit) or prescription drug.

    Cost-of-Living Adjustment (COLA) – Clause in an insurance policy that increases the benefit amount to keep pace with inflation.

    Deductible – The amount (usually a flat dollar amount; e.g., $500) of a claim that an insured person must pay out-of-pocket before an insurance policy makes payment for the remainder of the loss. The higher the deductible on a policy, the lower the premium (inverse relationship).

    Disability Insurance – Type of insurance that replaces lost earnings when someone is unable to work due to accident or illness.

    “Dread Disease” Insurance (e.g., Cancer Policies) – Very narrowly defined health insurance policies that cover only one cause of death (e.g., cancer). Most financial experts consider single-disease policies to be a very poor value because the benefits are so limited. A much better option is major medical coverage with a high upper limit.

    Elimination Period – The number of days (e.g., 30 days or 90 days), starting from the date of an insurable event, before benefits are paid on certain types of insurance policies (e.g., long-term care, disability).

    Excess Major Medical Insurance – A type of health insurance policy designed to take effect when ordinary major medical coverage benefits have been exhausted. It is highly recommended for people with a low major medical policy upper limit of less than $250,000.

    Exclusions – Risks that are not covered by an insurance policy.

    Family and Medical Leave – Federal law that provides up to 12 weeks of unpaid leave per year for use during a medical crisis to care for oneself or a family member. Employees of companies with 50 or more workers are eligible and are guaranteed a return to their previous (or a similar) job and health benefits during the time that they are away.

    Flexible Spending Accounts (FSAs) – They are also known as “cafeteria” or “125” plans, for Section 125 of the IRS tax code. FSAs allow workers to fund an account through salary reduction and withdraw the funds, as needed, for medical expenses. Any unspent funds left in an FSA at the end of each year are forfeited so it is important to carefully estimate the amount of money needed.

    Group Health Insurance Plan – Health care coverage that is sold collectively to a group of people (e.g., employees of a company) rather than to individuals. Group coverage is generally less expensive than individual coverage because the costs and risks are spread over a large group.

    Guaranteed Renewable – An insurance policy that will continue for life or until a certain specified age, assuming no lapse in premium payments. Premiums will not increase unless they are raised for everyone with the same type of policy.

    Health Finance Literacy – The ability to understand topics such as health care costs and benefits, how health insurance works, and health coverage rules, policy exclusions, and enrollment options.

    Health Insurance – Type of insurance that provides protection against financial losses resulting from an illness or injury.

    Health Management Benefits – Benefits and incentives provided by employers and insurers to promote a healthy lifestyle. Examples include: cash payments for weight loss, health club memberships, use of exercise equipment, free pedometers, and weight control support groups.

    Health Reimbursement Accounts (HRAs) – Money set aside by employers to reimburse workers for qualified medical expenses.

    Health Savings Accounts (HSAs) – Tax-sheltered accounts, set up and funded by eligible individuals, that are earmarked to pay for medical expenses and are designed to be used in conjunction with high-deductible health plans. Account owners are free to spend the money on any type of medical service desired. Whatever amount is not spent each year can be carried forward.

    High-Deductible Health Plan (HDHP) – As defined by federal legislation, a high deductible health plan has a deductible of at least $1,000 for individual coverage and $2,000 for family coverage.

    Indemnity Benefit – Payment by a health insurance policy of a fixed amount toward the cost of covered medical expenses. An example is a policy that pays $350 per day for hospital charges. Most financial experts consider indemnity coverage to be a poor value because the benefits are only a fraction of typical charges. A much better option is major medical coverage with a high upper limit.

    Long-Term Care Insurance – Type of insurance that covers the cost of support services (e.g., home health care and nursing home care) when someone is unable to perform basic activities of daily living such as bathing, eating, and dressing.

    Major Medical Coverage- Health insurance protection above and beyond basic medical benefits. Upper limits provided by major medical coverage can range from a low $10,000 up to $1 million and some policies have no maximum. If the upper limit is $250,000 or less, an excess major medical policy is recommended to protect against catastrophic losses that exceed the maximum coverage limit.

    Managed Care Health Insurance- Coverage provided by a health maintenance organization (HMO) or preferred provider organization (PPO) that emphasizes wellness and preventative care, controls the care that is provided, especially by specialists, and places limits on the selection of medical providers.

    Medicaid- Combined federal and state health insurance program for eligible low-income persons.

    Medicare – Federal health insurance program for people age 65 and older. Part A covers hospitalization and Part B covers treatment in a doctor’s office or hospital outpatient department.

    Medigap Insurance- Standardized policies (ranging from A to J, in order of increasing benefits) that are sold to persons age 65 and over to pay for expenses that are not covered by Medicare.

    Noncancellable – An insurance policy that will continue for life or a certain age, without an increase in cost, assuming no lapse in premium payments.

    Open Enrollment Period – The period of time each year, typically one full month, where participants in a group health insurance plan can begin or make changes in their coverage or switch among alternative plan providers (e.g., HMOs).

    Own-Occupation Disability Insurance – The least restrictive and most expensive type of disability insurance policy that defines disability as the inability to work in the particular field or trade for which an insured policyholder is trained.

    Policy Limit – The highest dollar amount that an insurance policy will pay.

    Preexisting Condition Clause- Language in a health insurance policy stating that medical conditions existing at the time that the policy is purchased will not be covered for a specified time period.

    Premium – The fee that is charged to pay for insurance coverage.

    Residual (Partial) Disability Benefits – Disability insurance benefits that are designed for disabled workers who return to work part-time. Residual disability benefits cover the difference between an insured worker’s full- and part-time earnings.

    Service Benefit – Payment by a health insurance company of a percentage of each covered expense.

    Short-Term Health Insurance – A relatively inexpensive policy, often with a high deductible and a number of coverage limits, that typically lasts from 30 days to six months and is purchased by people who are graduating from school or are in between jobs.

    Spend-Down Rules – Government regulations that stipulate the amount by which someone or their spouse must spend down their assets in order to qualify for Medicaid. Specific asset tests vary from state to state and limit a healthy spouse’s liability in the case of married couples.

    State Health Insurance Program (SHIP) – An agency, often affiliated with state/county offices of senior services, that provides free information and counseling about senior health insurance options (e.g., Medigap policies).

    Stop-Loss Limit – A limit on the amount that a policyholder must make in coinsurance and out-of-pocket payments per year on an insurance policy. Generally the stop-loss limit is stated as a flat dollar amount (e.g, $5,000). Once the stop-loss limit has been reached, the health insurance company picks up all remaining expenses for the year.

    Tiered Copayments – A cost containment method that is increasingly being used to influence the behavior of health plan participants and reduce health care costs. Different premiums are charged for different categories of prescription drugs such as a higher premium for “nonpreferred” drugs than for generic brands.

    Worker’s Compensation Insurance – Insurance coverage, provided according to state law, that requires employers to pay benefits to workers injured on the job. Worker’s compensation benefits include the cost of medical expenses, recuperative care, and replacement of lost income.



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