Law Week 8 Assignment 1- Healthcare Finance
2 months ago 20
Week8AssignmentInstructions-HealthcareFinance.docx
Week8LearningResources-HealthcareFinance.docx
USW1_MMHA_6400_Week08_ratioExcelTemplate.xlsx
WeekEightAssignment1version2.pdf
WK7Assgn_Campbell_L1.xlsx
Week8AssignmentInstructions-HealthcareFinance.docx
Week 8 Assignment
Healthcare Finance
Ratio Analysis
It is important to understand that when interpreting financial statements, the numbers alone may not provide the whole financial picture of an organization. Instead, you must analyze the statements using ratios, which are then compared to benchmarks across the healthcare industry. For this Assignment, examine the financial health of a community hospital.
To prepare for this Assignment:
· Review the Week 8 Assignment 1 document provided to you by the instructor. Examine the financial statements from the community hospital. Reflect on how you will use this financial data to calculate and analyze the organization’s financial ratios.
· Refer to Chapter 13 of Gapinski’s Understanding Healthcare Financial Management.
· Download Week 8 Assignment 1 Ratio Excel Template.
Submit the following:
· Using the statement of operations and balance sheet for the community hospital, complete the “Week 8 Ratio Excel Template.”
Refer to the Week 8 Assignment 1 Rubric for specific grading elements and criteria. Your instructor will use this grading rubric to assess your work.
Week8LearningResources-HealthcareFinance.docx
Week 8 Learning Resources
Healthcare Finance
Required Readings
· Pink, G. H., & Song, P. H. (2020). Gapinski’s understanding healthcare financial management (8th ed.). Health Administration Press.
· Chapter 8, “Lease Financing” (pp. 281–313)
· Chapter 9, “Cost of Capital” (pp. 317–358)
· Review: Chapter 13, “Financial Condition Analysis” (pp. 507–548)
· Center for Health Information and Analysis. (n.d.). Interpretation of financial ratiosLinks to an external site. . https://www.chiamass.gov/interpretation-of-financial-ratios/
· Enumah, S. J., Resnick, A. S., & Chang, D. C. (2022). Association of measured quality with financial health among U.S. hospitalsLinks to an external site. . PloS One, 17(4), 1–13. https://doi.org/10.1371/journal.pone.0266696
· Stahl, M. J. (2006). Breakeven analysisLinks to an external site. . In Encyclopedia of Health Care Management. Sage. https://doi.org/10.4135/9781412950602 Links to an external site.
· Stahl, M. J. (2006). Ratio analysisLinks to an external site. . In Encyclopedia of Health Care Management. Sage. https://doi.org/10.4135/9781412950602
· Document: Week 8 Assignment 1 Ratio Excel Template (Excel spreadsheet)
Optional Resources
· OASIS. (n.d.). Statistics skills in Microsoft ExcelLinks to an external site. . Walden University. https://academicguides.waldenu.edu/academic-skills-center/microsoft-office/excel
USW1_MMHA_6400_Week08_ratioExcelTemplate.xlsx
Ratio Template
| Week 8 Assignment 1 Ratio Template | |||||||||||||
| A | B | D | E | F | G | ||||||||
| (in '000) | |||||||||||||
| 12/31/22 | 12/31/23 | 2022 | 2022 | 2023 | 2023 | ||||||||
| Ratio[a] | [D/E] | [F/G] | Numerator | Denominator | Numerator | Denominator | |||||||
| Current Ratio | |||||||||||||
| Quick Ratio | |||||||||||||
| Acid Test Ratio | |||||||||||||
| Days in Accounts Receivable | |||||||||||||
| Days Cash on Hand | |||||||||||||
| Average Payment Period (Days) | |||||||||||||
| Operating Revenue per Adjusted Discharge | |||||||||||||
| Operating Expense per Adjusted Discharge | |||||||||||||
| Salary & Benefit Exp. as % of Operating Exp. | |||||||||||||
| Operating Margin | |||||||||||||
| Non-Operating Revenue | |||||||||||||
| Return on Total Assets | |||||||||||||
| Return on Net Assets | |||||||||||||
| Total Asset Turnover Ratio | |||||||||||||
| Fixed Asset Turnover Ratio | |||||||||||||
| Age of Plant Ratio | |||||||||||||
| Long-Term Debt to Net Assets | |||||||||||||
| Net Assets to Total Assets |
WeekEightAssignment1version2.pdf
© 2024 Walden University Page 1 of 3
Healthcare Financial Management and Economics
Week 8 Assignment 1 — Hidden Hollow Community
Hospital
Assignment 1: Ratio Analysis
It is important to understand that when interpreting financial statements, the numbers alone may not provide the whole financial picture of an organization. Instead, you must analyze the statements using ratios, which are then compared to benchmarks across the healthcare industry. For this Assignment, you examine the financial documents for Hidden Hollow Community Hospital and analyze the organization’s financial health.
Hidden Hollow Community Hospital
Hidden Hollow Community Hospital is a small community hospital serving a rural population. The adjusted discharges are 3.30 for the 1st year and 3.10 for the 2nd.
Hidden Hollow Community Hospital Statement of Operations (in thousands) for the
Years Ended December 31, 2022 and 2023
2022 2023
Revenues
Net patient service revenue $22,000 $19,000 Net assets released from restriction 1,000 800
Total operating revenues 23,000 19,800
Expenses
Salaries and benefits 11,000 8,000 Supplies and other expenses 7,000 6,000 Depreciation 2,500 2,100 General services 300 520
Total operating expenses 20,800 16,620
Operating income 1,250 4,200
Non-operating income 3,500 2,200
Excess of revenues over expenses 4,750 6,400
Increase (decrease) in net assets $4,750 $6,400
© 2024 Walden University Page 2 of 3
Hidden Hollow Community Hospital Balance Sheet (in thousands) for the
Years Ended December 31, 2022 and 2023
2022 2023
Current assets
Cash and cash equivalents
$600 $400
Net patient receivables 4,000 3,500 Inventory 1,000 900
Total current assets 5,600 4,800
Non-current assets
Plant, property, and equipment
Gross plant, property, and equipment
25,000 23,000
(less accumulated depreciation)
(18,000) (17,000)
Net plant, property, and equipment
7,000 6,000
Board-designated funds 19,000 10,000
Total assets 31,600 20,800
Current liabilities
Accounts payable 2,600 2,100 Accrued expenses 850 900
Total current liabilities 3,450 3,000
Long-term liabilities
Bonds payable 5,600 7,150
Total long-term liabilities 5,600 7,150
Net assets 22,550 10,650
Total liabilities and net assets
$31,600 $20,800
To prepare for this Assignment:
Examine the financial statements from Hidden Hollow Community Hospital. Reflect on how you will use this financial data to calculate and analyze the organization’s financial ratios. Refer to Chapter 13 of Gapinski’s Understanding Healthcare Financial Management for additional guidance.
© 2024 Walden University Page 3 of 3
The Assignment:
Using the statement of operations and balance sheet for Jackson Community Hospital ,above complete the “Week 8 Assignment 1 Ratio Excel Template”.
Your Assignment is due by Day 7 of Week 8.
WK7Assgn_Campbell_L1.xlsx
Balance Sheet
| Balance Sheet (in '000s) | |
| For the Year Ended September 30, 2023 | |
| 9/30/23 | |
| Current assets | |
| Cash and cash equivalents | $20,000 |
| Net accounts receivable | 25,000 |
| Inventory | 1,100 |
| Total current assets | 46,100 |
| Gross plant, property, and equipment | 556,000 |
| (less accumulated depreciation) | 99,000 |
| Net plant, property & equipment | 457,000 |
| Long-term investments | 148,400 |
| Total assets | $651,500 |
| Current liabilities | |
| Accounts payable | $18,000 |
| Wages payable | 9,100 |
| Total current liabilities | 27,100 |
| Long-term debt | 189,700 |
| Total liabilities | 216,800 |
| Net assets | |
| Ending balance, unrestricted net assets | 426,000 |
| Ending balance, temporarily restricted net assets | 8,700 |
| Total net assets | 434,700 |
| Total liabilities and net assets | $651,500 |
Profit and Loss Statement
| Profit and Loss Statement | |
| Statement of Operations (in '000s) | |
| For the Year Ended September 30, 2023 | |
| 9/30/23 | |
| Unrestricted revenues | |
| Patient revenues (net of contractuals) | $614,000 |
| Provision for bad debt expense | $5,400 |
| Net patient revenues | $608,600 |
| Net assets released from temporary restriction | 8,000 |
| Total revenues | 616,600 |
| Operating expenses: | |
| Labor expense | 145,000 |
| General expense | 95,000 |
| Supply expense | 66,000 |
| Depreciation expense | 10,000 |
| Insurance expense | 70,000 |
| Total operating expenses | 386,000 |
| Excess of revenues over expenses | 230,600 |
| Transfer to parent corporation | (8,000) |
| Increase in unrestricted net assets | $222,600 |
Cash Flow Statement
| Cash Flow Statement | |
| Statement of Changes in Net Assets (in '000s) | |
| For the Year Ended September 30, 2023 | |
| 9/30/23 | |
| Unrestricted net assets | |
| Excess of revenues over expenses | 230,600 |
| Unrestricted contributions | 0 |
| Transfer to parent corporation | (8,000) |
| Change in unrestricted net assets | 222,600 |
| Temporarily restricted net assets | |
| Net assets released from temporary restriction | (8,000) |
| Change in temporarily restricted net assets | (8,000) |
| Permanently restricted net assets | |
| 0 | |
| Change in permanently restricted net assets | 0 |
| Increase in net assets | 214,600 |
| Beginning balance, net assets | 220,100 |
| Ending balance, total net assets | $434,700 |
Week8AssignmentInstructions-HealthcareFinance.docx
Week 8 Assignment
Healthcare Finance
Ratio Analysis
It is important to understand that when interpreting financial statements, the numbers alone may not provide the whole financial picture of an organization. Instead, you must analyze the statements using ratios, which are then compared to benchmarks across the healthcare industry. For this Assignment, examine the financial health of a community hospital.
To prepare for this Assignment:
· Review the Week 8 Assignment 1 document provided to you by the instructor. Examine the financial statements from the community hospital. Reflect on how you will use this financial data to calculate and analyze the organization’s financial ratios.
· Refer to Chapter 13 of Gapinski’s Understanding Healthcare Financial Management.
· Download Week 8 Assignment 1 Ratio Excel Template.
Submit the following:
· Using the statement of operations and balance sheet for the community hospital, complete the “Week 8 Ratio Excel Template.”
Refer to the Week 8 Assignment 1 Rubric for specific grading elements and criteria. Your instructor will use this grading rubric to assess your work.
Week8LearningResources-HealthcareFinance.docx
Week 8 Learning Resources
Healthcare Finance
Required Readings
· Pink, G. H., & Song, P. H. (2020). Gapinski’s understanding healthcare financial management (8th ed.). Health Administration Press.
· Chapter 8, “Lease Financing” (pp. 281–313)
· Chapter 9, “Cost of Capital” (pp. 317–358)
· Review: Chapter 13, “Financial Condition Analysis” (pp. 507–548)
· Center for Health Information and Analysis. (n.d.). Interpretation of financial ratiosLinks to an external site. . https://www.chiamass.gov/interpretation-of-financial-ratios/
· Enumah, S. J., Resnick, A. S., & Chang, D. C. (2022). Association of measured quality with financial health among U.S. hospitalsLinks to an external site. . PloS One, 17(4), 1–13. https://doi.org/10.1371/journal.pone.0266696
· Stahl, M. J. (2006). Breakeven analysisLinks to an external site. . In Encyclopedia of Health Care Management. Sage. https://doi.org/10.4135/9781412950602 Links to an external site.
· Stahl, M. J. (2006). Ratio analysisLinks to an external site. . In Encyclopedia of Health Care Management. Sage. https://doi.org/10.4135/9781412950602
· Document: Week 8 Assignment 1 Ratio Excel Template (Excel spreadsheet)
Optional Resources
· OASIS. (n.d.). Statistics skills in Microsoft ExcelLinks to an external site. . Walden University. https://academicguides.waldenu.edu/academic-skills-center/microsoft-office/excel
USW1_MMHA_6400_Week08_ratioExcelTemplate.xlsx
Ratio Template
| Week 8 Assignment 1 Ratio Template | |||||||||||||
| A | B | D | E | F | G | ||||||||
| (in '000) | |||||||||||||
| 12/31/22 | 12/31/23 | 2022 | 2022 | 2023 | 2023 | ||||||||
| Ratio[a] | [D/E] | [F/G] | Numerator | Denominator | Numerator | Denominator | |||||||
| Current Ratio | |||||||||||||
| Quick Ratio | |||||||||||||
| Acid Test Ratio | |||||||||||||
| Days in Accounts Receivable | |||||||||||||
| Days Cash on Hand | |||||||||||||
| Average Payment Period (Days) | |||||||||||||
| Operating Revenue per Adjusted Discharge | |||||||||||||
| Operating Expense per Adjusted Discharge | |||||||||||||
| Salary & Benefit Exp. as % of Operating Exp. | |||||||||||||
| Operating Margin | |||||||||||||
| Non-Operating Revenue | |||||||||||||
| Return on Total Assets | |||||||||||||
| Return on Net Assets | |||||||||||||
| Total Asset Turnover Ratio | |||||||||||||
| Fixed Asset Turnover Ratio | |||||||||||||
| Age of Plant Ratio | |||||||||||||
| Long-Term Debt to Net Assets | |||||||||||||
| Net Assets to Total Assets |
WeekEightAssignment1version2.pdf
© 2024 Walden University Page 1 of 3
Healthcare Financial Management and Economics
Week 8 Assignment 1 — Hidden Hollow Community
Hospital
Assignment 1: Ratio Analysis
It is important to understand that when interpreting financial statements, the numbers alone may not provide the whole financial picture of an organization. Instead, you must analyze the statements using ratios, which are then compared to benchmarks across the healthcare industry. For this Assignment, you examine the financial documents for Hidden Hollow Community Hospital and analyze the organization’s financial health.
Hidden Hollow Community Hospital
Hidden Hollow Community Hospital is a small community hospital serving a rural population. The adjusted discharges are 3.30 for the 1st year and 3.10 for the 2nd.
Hidden Hollow Community Hospital Statement of Operations (in thousands) for the
Years Ended December 31, 2022 and 2023
2022 2023
Revenues
Net patient service revenue $22,000 $19,000 Net assets released from restriction 1,000 800
Total operating revenues 23,000 19,800
Expenses
Salaries and benefits 11,000 8,000 Supplies and other expenses 7,000 6,000 Depreciation 2,500 2,100 General services 300 520
Total operating expenses 20,800 16,620
Operating income 1,250 4,200
Non-operating income 3,500 2,200
Excess of revenues over expenses 4,750 6,400
Increase (decrease) in net assets $4,750 $6,400
© 2024 Walden University Page 2 of 3
Hidden Hollow Community Hospital Balance Sheet (in thousands) for the
Years Ended December 31, 2022 and 2023
2022 2023
Current assets
Cash and cash equivalents
$600 $400
Net patient receivables 4,000 3,500 Inventory 1,000 900
Total current assets 5,600 4,800
Non-current assets
Plant, property, and equipment
Gross plant, property, and equipment
25,000 23,000
(less accumulated depreciation)
(18,000) (17,000)
Net plant, property, and equipment
7,000 6,000
Board-designated funds 19,000 10,000
Total assets 31,600 20,800
Current liabilities
Accounts payable 2,600 2,100 Accrued expenses 850 900
Total current liabilities 3,450 3,000
Long-term liabilities
Bonds payable 5,600 7,150
Total long-term liabilities 5,600 7,150
Net assets 22,550 10,650
Total liabilities and net assets
$31,600 $20,800
To prepare for this Assignment:
Examine the financial statements from Hidden Hollow Community Hospital. Reflect on how you will use this financial data to calculate and analyze the organization’s financial ratios. Refer to Chapter 13 of Gapinski’s Understanding Healthcare Financial Management for additional guidance.
© 2024 Walden University Page 3 of 3
The Assignment:
Using the statement of operations and balance sheet for Jackson Community Hospital ,above complete the “Week 8 Assignment 1 Ratio Excel Template”.
Your Assignment is due by Day 7 of Week 8.
WK7Assgn_Campbell_L1.xlsx
Balance Sheet
| Balance Sheet (in '000s) | |
| For the Year Ended September 30, 2023 | |
| 9/30/23 | |
| Current assets | |
| Cash and cash equivalents | $20,000 |
| Net accounts receivable | 25,000 |
| Inventory | 1,100 |
| Total current assets | 46,100 |
| Gross plant, property, and equipment | 556,000 |
| (less accumulated depreciation) | 99,000 |
| Net plant, property & equipment | 457,000 |
| Long-term investments | 148,400 |
| Total assets | $651,500 |
| Current liabilities | |
| Accounts payable | $18,000 |
| Wages payable | 9,100 |
| Total current liabilities | 27,100 |
| Long-term debt | 189,700 |
| Total liabilities | 216,800 |
| Net assets | |
| Ending balance, unrestricted net assets | 426,000 |
| Ending balance, temporarily restricted net assets | 8,700 |
| Total net assets | 434,700 |
| Total liabilities and net assets | $651,500 |
Profit and Loss Statement
| Profit and Loss Statement | |
| Statement of Operations (in '000s) | |
| For the Year Ended September 30, 2023 | |
| 9/30/23 | |
| Unrestricted revenues | |
| Patient revenues (net of contractuals) | $614,000 |
| Provision for bad debt expense | $5,400 |
| Net patient revenues | $608,600 |
| Net assets released from temporary restriction | 8,000 |
| Total revenues | 616,600 |
| Operating expenses: | |
| Labor expense | 145,000 |
| General expense | 95,000 |
| Supply expense | 66,000 |
| Depreciation expense | 10,000 |
| Insurance expense | 70,000 |
| Total operating expenses | 386,000 |
| Excess of revenues over expenses | 230,600 |
| Transfer to parent corporation | (8,000) |
| Increase in unrestricted net assets | $222,600 |
Cash Flow Statement
| Cash Flow Statement | |
| Statement of Changes in Net Assets (in '000s) | |
| For the Year Ended September 30, 2023 | |
| 9/30/23 | |
| Unrestricted net assets | |
| Excess of revenues over expenses | 230,600 |
| Unrestricted contributions | 0 |
| Transfer to parent corporation | (8,000) |
| Change in unrestricted net assets | 222,600 |
| Temporarily restricted net assets | |
| Net assets released from temporary restriction | (8,000) |
| Change in temporarily restricted net assets | (8,000) |
| Permanently restricted net assets | |
| 0 | |
| Change in permanently restricted net assets | 0 |
| Increase in net assets | 214,600 |
| Beginning balance, net assets | 220,100 |
| Ending balance, total net assets | $434,700 |
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