AHIP AHM-520 Exam - Topic 6 Question 94 Discussion

Actual exam question for AHIP's AHM-520 exam

Question #: 94
Topic #: 6

The Puma health plan uses return on investment (ROI) and residual income (RI) to measure the performance of its investment centers. Two of these investment centers are identified as X and Y. Investment Center X earns $10,000,000 in operating income on controllable investments of $50,000,000, and it has total revenues of $60,000,000. Investment Center Y earns $2,000,000 in operating income on controllable investments of $8,000,000, and it has total revenues of $10,000,000. Both centers have a minimum required rate of return of 15%.

One likely way in which Investment Center X or Y could effectively increase its ROI is by

AFocusing only on increasing its total revenues

BIncreasing its controllable investments

CIncreasing total revenues, accompanied by a proportionate increase in operating income

DIncreasing expenses in order to increase operating income

Show Suggested Answer

Suggested Answer: B

by Enola at Aug 07, 2024, 01:54 AM

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Lorean

4 months ago

X's income is impressive, but can it be maintained?

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Tracie

4 months ago

C seems like the best choice for sustainable growth.

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Lore

4 months ago

Wait, can increasing expenses really boost operating income?

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Alexia

4 months ago

Totally agree, focusing on revenue is key!

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Aleta

5 months ago

Investment Center X has a much higher ROI than Y.

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Lore

5 months ago

I recall a similar question where we analyzed the impact of controllable investments on ROI. I think focusing on that could be key for both centers.

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Jame

5 months ago

I'm a bit uncertain about option D. Increasing expenses to boost operating income seems risky; it might not guarantee a better ROI.

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Lino

5 months ago

I think option C makes sense because if revenues and operating income both increase, it should positively impact ROI, right?

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Clorinda

5 months ago

I remember we discussed how increasing total revenues could help improve ROI, but I'm not sure if it should be the only focus.

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Kattie

5 months ago

I'm not sure about this one. Increasing total revenues alone (option A) doesn't necessarily improve ROI, and increasing expenses (option D) would just lower ROI. I'm leaning towards option B, increasing the controllable investments, but I'm not totally confident.

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Ettie

5 months ago

Okay, I think I've got this. The question is asking about how to effectively increase ROI, so the answer has to be something that improves the ROI calculation, which is operating income divided by controllable investments. Option C seems like the best choice - increasing revenues and operating income proportionately.

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Nieves

5 months ago

Hmm, I'm a bit confused. Do we need to consider both ROI and RI, or just focus on maximizing ROI? The question mentions both metrics, but the answer choices seem to be about ROI only.

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Lindy

6 months ago

This seems like a straightforward question about maximizing ROI. I think the key is to focus on the relationship between revenues, operating income, and investments.

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Peter

6 months ago

This is a good question to test our understanding of performance optimization. I'll need to carefully consider the options and make sure I select the two most relevant reasons.

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Rose

6 months ago

I'm a bit confused on the difference between the tenant types. Is the "management tenant" responsible for managing the firewalls? That could be a possibility, but I'm not sure.

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In

11 months ago

Option D: Throw money at the problem and hope it goes away. That's the corporate way, right?

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Annelle

9 months ago

C) Increasing total revenues, accompanied by a proportionate increase in operating income

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Noel

10 months ago

B) Increasing its controllable investments

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James

10 months ago

A) Focusing only on increasing its total revenues

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Esteban

11 months ago

Ah, the age-old dilemma of ROI vs. RI. This question is like asking whether to focus on making money or saving money. I think I'll go with the one that won't land me in the poorhouse.

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Glenn

10 months ago

A) Focusing only on increasing its total revenues

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Glenn

10 months ago

C) Increasing total revenues, accompanied by a proportionate increase in operating income

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Glenn

10 months ago

B) Increasing its controllable investments

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Stevie

11 months ago

The key here is to maximize the return on the controllable investments. Option B seems like the logical choice, but I wonder if the exam is trying to trick us.

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Eric

9 months ago

I agree, increasing controllable investments would directly impact the ROI.

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Noah

9 months ago

I think option B is the best choice to maximize ROI.

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Brianne

10 months ago

C) Increasing total revenues, accompanied by a proportionate increase in operating income

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Chantell

10 months ago

B) Increasing its controllable investments

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Bronwyn

11 months ago

A) Focusing only on increasing its total revenues

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Josue

11 months ago

Increasing expenses to boost operating income? That's like trying to lose weight by eating more. Option D is a definite no-go.

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Fidelia

11 months ago

Increasing expenses to boost operating income? That's like trying to lose weight by eating more. Option D is a definite no-go.

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Lura

11 months ago

A) Focusing only on increasing its total revenues

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Lenna

11 months ago

Hmm, focusing on increasing total revenues sounds tempting, but that doesn't necessarily improve the ROI. I think option C is the way to go - increase revenues and operating income proportionately to maintain the ROI.

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