29 Jan Examine the financial
Healthcare Financial Management and Economics
Week 8 Assignment 1 — Madison 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 Madison Community Hospital and analyze the organization’s financial health.
Madison Community Hospital
Madison 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.
Madison Community Hospital
Statement of Operations (in thousands) for the
Years Ended December 31, 2016 and 2017
2016 2017
Revenues
Net patient service revenue $23,000 $22,500
Net assets released from restriction 1,000 800
Total operating revenues 24,000 23,300
Expenses
Salaries and benefits 10,500 9,000
Supplies and other expenses 7,000 5,000
Depreciation 3,500 2,500
General services 300 520
Total operating expenses 21,300 17,020
Operating income 4,520 1,200
Non-operating income 3,500 2,200
Excess of revenues over expenses 8,020 3,400
Increase (decrease) in net assets $8,020 $3,400
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Madison Community Hospital Balance Sheet (in thousands) for the Years Ended December 31, 2016 and 2017
2016 2017
Current assets
Cash and cash equivalents $1,100 $800
Net patient receivables 4,200 3,500
Inventory 1,200 1,100
Total current assets 6,500 5,250
Non-current assets
Plant, property, and equipment
Gross plant, property, and 35,000 32,000
equipment
(less accumulated depreciation) (18,000) (17,000)
Net plant, property, and equipment 19,000 16,500
Board-designated funds 19,000 10,000
Total assets 44,500 31,750
Current liabilities
Accounts payable 3,500 3,400
Accrued expenses 850 900
Total current liabilities 4,350 4,300
Long-term liabilities
Bonds payable 8,500 7,900
Total long-term liabilities 8,500 7,900
Net assets 31,650 19,550
Total liabilities and net assets $44,500 $31,750
To prepare for this Assignment:
Examine the financial statements from Madison Community Hospital. Reflect on how you will use this financial data to calculate and analyze the organization’s financial ratios. Refer to Chapter 4 of Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applications for additional guidance.
The Assignment:
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Using the statement of operations and balance sheet for Madison Community Hospital below, complete the “Week 8 Assignment 1 Ratio Excel Template”.
Your Assignment is due by Day 7 of Week 8.
© 2015 Laureate Education, Inc. Page 3 of 3
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