Calculation

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Healthcare Financial Management and Economics

Week 8 Assignment 1 — Fordsville 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 Fordsville Community Hospital and analyze the organization’s financial health.

Fordsville Community Hospital

Fordsville 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.

Fordsville Community Hospital Statement of Operations (in thousands) for the Years Ended December 31, 2018 and 2019

2018 2019

Revenues Net patient service revenue $23,000 $19,000 Net assets released from restriction 1,000 800 Total operating revenues 24,000 19,800

Expenses Salaries and benefits 13,000 9,000 Supplies and other expenses 7,000 6,000 Depreciation 2,500 2,000 General services 200 100 Total operating expenses 22,700 17,100

Operating income 1,300 2,700 Non-operating income 4,000 2,500

Excess of revenues over expenses 5,300 5,200

Increase (decrease) in net assets $5,300 $5,200

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Fordsville Community Hospital Balance Sheet (in thousands) for the Years Ended December 31, 2018 and 2019

2018 2019 Current assets Cash and cash equivalents

$700 $500

Net patient receivables 4,000 3,500 Inventory 950 750 Total current assets 5,650 4,750

Non-current assets Plant, property, and equipment Gross plant, property, and equipment

26,500 24,000

(less accumulated depreciation)

(18,000) (17,000)

Net plant, property, and equipment

8,500 7,000

Board-designated funds 18,000 9,000

Total assets 32,150 20,750

Current liabilities Accounts payable 2,500 2,000 Accrued expenses 900 250 Total current liabilities 3,400 2,250

Long-term liabilities Bonds payable 6,500 8,000 Total long-term liabilities 6,500 8,000

Net assets 22,250 10,500

Total liabilities and net assets

$32,150 $20,750

To prepare for this Assignment:

Examine the financial statements from Fordsville 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.

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The Assignment:

Using the statement of operations and balance sheet for Fordsville Community Hospital, complete the “Week 8 Assignment 1 Ratio Excel Template”.

Your Assignment is due by Day 7 of Week 8.