Assignment 1: Case Study Analysis Discussion—SMH Revenue and Income Cycle Variables
The SMH financial statement contains additional data that will allow you to conduct an analysis of revenue efficiency factors. Using this data, you will measure revenue and expense cycle variables and determine the impact on net income. You will use this data again in Module 4.
In this assignment, you will calculate variable expenses including labor, supply, and drug costs. You will also compare profitability by payer. The SMH data file, which you had downloaded from the Doc Sharing area, contains data on revenue and expenses, categorized by department. You will determine revenue and expenses for two departments. Instructions are included in the data file. You will discuss the impact of payer mix and cost control on the profitability of a hospital. Based on your analysis, discuss the impact of payer mix and cost control on the profitability of a hospital.
Using the SMH data file, you will do the following:
· Create a table that shows gross profit (patient revenue – direct expenses) for inpatient and outpatient services.
· Calculate gross profit (GP) margins for both services.
· Calculate GP per patient day and per operating theater (OT) procedure.
· Compare your expenses to your benchmark data. (Because some of the comparative data does not have sufficient detail this may be a high-level review.)
· Comment on the services from the perspective of expense and revenue distribution and explain why there are differences between GP margins.
· Complete a table that includes other expenses and other revenue. The table should clearly distinguish between direct and indirect expenses.
· Comment on why other income and contributions are critical to the survival of the organization. Does the reliance on investment income mean that the organization will take a higher risk in order to increase income?
Write a 4- to 5-page paper in Word format. All written assignments and responses should follow APA rules for attributing sources.
You will use Excel to conduct your cost and revenue analysis. The data from Excel can be placed in the Word document as either tables or an appendix. You will also submit your Excel file content so that the calculations can be reviewed.
Use the following file naming convention: LastnameFirstInitial_M3_A1.doc and LastnameFirstInitial_M3_A1.xls.
By Saturday, September 14, 2013, submit your assignment to the M3: Assignment 1 Dropbox. Through Wednesday, September 18, 2013, join in our discussion of this assignment.
Use the following questions to direct your discussion participation:
· Suppose you benchmark the length of stay (LOS) for SMH against its peers and find the SMH LOS higher. What strategies can you use? Are there other mitigating variables that you should look at before making a decision?
· A facility has to address an increasing full-time equivalent provider (FTE) per patient day statistic. Without reducing staff, what measures can the facility take?
Assignment 1 Grading Criteria
Maximum Points
Calculations demonstrated adequate and accurate analysis of revenue and expense cycle variables.
20
Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources, displayed accurate spelling, grammar, and punctuation.
4
Actively contributed to the discussion by providing points of view with rationale, challenging points of the discussion, or drawing relationships between points of the discussion.
12
Total:
36
SMH and State Funding
HM6020 Accounting and Finance for Healthcare Managers
SMH and State Funding
There have been external developments that impact our facility. SMH is facing an
economic crisis. Among other issues, the hospital is experiencing a loss of
$10 million in Medicaid funding from the state, an increase in uninsured patients,
and increased costs. At the same time the hospital’s alternate sources of cash
and capital are drying up.
The economic crisis has forced SMH to reassess its cu
ent operations. To be
able to manage the potential losses in revenue, the hospital has to look at
various aspects of operations. What product lines generate a gross profit
margin? Which payers are inherently risky? Where does the hospital have
negotiating power with managed care providers?
This Module
Funding cuts to hospitals is not just a regional or local problem. In nearly every
state, the tax structure suffers the effects of loss of jobs and decreased property
values. As a result of these economic problems, there is less money available for
social programs. Medicaid funding, which is at the state level, is directly
impacted. Consequently, states are faced with the dual problem of less funding
and an ever-increasing number of uninsured. The impact on hospitals can be
devastating.
In this module, you will do financial analysis of the type SMH has undertaken.
You will calculate gross profit by payer and by major service line both inpatient
and outpatient. You will then draw conclusions about sources of revenue and
expenses. You will grasp the difference between direct and indirect expenses.
Finally, you will use this information to develop a strategy for negotiating a
managed care contract.
Page 1 of 1
Module 3: SMH and State Funding
© 2009 Argosy University
SMH and State Funding
HM6020 Accounting and Finance for Healthcare Managers
SMH and State Funding
There have been external developments that impact our facility. SMH is facing an
economic crisis. Among other issues, the hospital is experiencing a loss of
$10 million in Medicaid funding from the state, an increase in uninsured patients,
and increased costs. At the same time the hospital’s alternate sources of cash
and capital are drying up.
The economic crisis has forced SMH to reassess its cu
ent operations. To be
able to manage the potential losses in revenue, the hospital has to look at
various aspects of operations. What product lines generate a gross profit
margin? Which payers are inherently risky? Where does the hospital have
negotiating power with managed care providers?
This Module
Funding cuts to hospitals is not just a regional or local problem. In nearly every
state, the tax structure suffers the effects of loss of jobs and decreased property
values. As a result of these economic problems, there is less money available for
social programs. Medicaid funding, which is at the state level, is directly
impacted. Consequently, states are faced with the dual problem of less funding
and an ever-increasing number of uninsured. The impact on hospitals can be
devastating.
In this module, you will do financial analysis of the type SMH has undertaken.
You will calculate gross profit by payer and by major service line both inpatient
and outpatient. You will then draw conclusions about sources of revenue and
expenses. You will grasp the difference between direct and indirect expenses.
Finally, you will use this information to develop a strategy for negotiating a
managed care contract.
Page 1 of 1
Module 3: SMH and State Funding
© 2009 Argosy University
SMH and State Funding
HM6020 Accounting and Finance for Healthcare Managers
SMH and State Funding
There have been external developments that impact our facility. SMH is facing an
economic crisis. Among other issues, the hospital is experiencing a loss of
$10 million in Medicaid funding from the state, an increase in uninsured patients,
and increased costs. At the same time the hospital’s alternate sources of cash
and capital are drying up.
The economic crisis has forced SMH to reassess its cu
ent operations. To be
able to manage the potential losses in revenue, the hospital has to look at
various aspects of operations. What product lines generate a gross profit
margin? Which payers are inherently risky? Where does the hospital have
negotiating power with managed care providers?
This Module
Funding cuts to hospitals is not just a regional or local problem. In nearly every
state, the tax structure suffers the effects of loss of jobs and decreased property
values. As a result of these economic problems, there is less money available for
social programs. Medicaid funding, which is at the state level, is directly
impacted. Consequently, states are faced with the dual problem of less funding
and an ever-increasing number of uninsured. The impact on hospitals can be
devastating.
In this module, you will do financial analysis of the type SMH has undertaken.
You will calculate gross profit by payer and by major service line both inpatient
and outpatient. You will then draw conclusions about sources of revenue and
expenses. You will grasp the difference between direct and indirect expenses.
Finally, you will use this information to develop a strategy for negotiating a
managed care contract.
Page 1 of 1
Module 3: SMH and State Funding
© 2009 Argosy University