Week 8 Assignment 1
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Healthcare Financial Management and Economics
Week 8 Assignment 1 — Muhlenberg 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
Muhlenberg Community Hospital and analyze the organization’s financial health.
Muhlenberg Community Hospital
Muhlenberg 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.
MUhlenberg Community Hospital
Statement of Operations (in thousands) for the
Years Ended December 31, 2018 and 2019
XXXXXXXXXX
Revenues
Net patient service revenue $21,000 $17,000
Net assets released from restriction 1,000 800
Total operating revenues 22,000 17,800
Expenses
Salaries and benefits 12,000 8,000
Supplies and other expenses 6,000 5,000
Depreciation 2,300 1,900
General services XXXXXXXXXX
Total operating expenses 20,500 15,000
Operating income 1,500 2,800
Non-operating income 3,500 2,200
Excess of revenues over expenses 5,000 5,000
Increase (decrease) in net assets $5,000 $5,000
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Muhlenberg Community Hospital
Balance Sheet (in thousands) for the
Years Ended December 31, 2018 and 2019
XXXXXXXXXX
Cu
ent assets
Cash and cash
equivalents
$600 $400
Net patient receivables 4,000 3,500
Inventory XXXXXXXXXX
Total cu
ent assets 5,500 4,700
Non-cu
ent assets
Plant, property, and
equipment
Gross plant, property,
and equipment
25,000 23,000
(less accumulated
depreciation)
(18, XXXXXXXXXX,000)
Net plant, property, and
equipment
7,000 6,000
Board-designated funds 18,000 9,000
Total assets 30,500 20,250
Cu
ent liabilities
Accounts payable 2,500 2,000
Accrued expenses XXXXXXXXXX
Total cu
ent liabilities 3,350 2,900
Long-term liabilities
Bonds payable 5,500 7,500
Total long-term liabilities 5,500 7,500
Net assets 21,650 9,850
Total liabilities and net
assets
$30,500 $20,250
To prepare for this Assignment:
Examine the financial statements from Muhlenberg Community Hospital. Reflect on
how you will use this financial data to calculate and analyze the organization’s financial
atios. 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 Springfield Community
Hospital below, complete the “Week 8 Assignment 1 Ratio Excel Template”.
Your Assignment is due by Day 7 of Week 8.
Week 8 Assignment 2
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Healthcare Financial Management and Economics
Week 8 Assignment 2 — Southeast Physician Imaging Center
Assignment 2: Break-Even Point Formulas
Before making hiring or purchasing decisions, healthcare organizations must consider
whether the decision is financially profitable. By calculating
eak-even points,
organizations are able to examine actual costs and make more sound financial
decisions. For this Assignment, you use data from the Southeast Physician Imaging
Center and calculate
eak-even points.
Scenario: Southeast Physician Imaging Center is a small imaging center with two
analogue film or screen units. As the director of the center, Bob Jones has been asked
to determine if the cu
ent staffing is co
ect for his place or should he add another aide.
He cu
ently uses 2 mammography units, 2 Certified Technologists, and 1 aide. He has
analyzed the cu
ent costs and determined the following:
Reimbursement per screen $95
Equipment lease per month ($1,000 per machine) $2000
Certified Technologists costs per mammography ($18 per Tech) $36
Technologist aide per mammography $8
Variable cost per mammography $9
Equipment maintenance per month ($750 per machine) $1500
To prepare for the Assignment:
Examine the Southeast Physician Imaging Center scenario. Reflect on how you will use
the provided financial data to calculate
eak-even points. Refer to Chapter 11 of
Gapinski’s Understanding Healthcare Financial Management for additional guidance.
The Assignment:
Given the above information, use the “Week 8 Assignment 2 Break Even Excel
Template” to answer these items as a Department:
A. Solve for monthly volume to
eak even.
B. Solve for monthly volume needed to
eak even at desired $5,000 per month
profit level.
C. Solve for volume needed to
eak even at new reimbursement of $75 per screen
and no profit.
D. Solve for volume needed to
eak even with one(1) additional aide.
Your Assignment is due by Day 7 of Week 8.
Healthcare Financial Management and Economics
Week 8 Assignment 2 — Southeast Physician Imaging Cente
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. Using the statement of operations and balance sheet for the community hospital, complete the “Week 8 Ratio Excel Template”.
Examine the imaging center scenario. Reflect on how you will use the provided financial data to calculate
eak-even points. Refer to Chapter 11 of Gapinski’s Understanding Healthcare Financial Management. Given the imaging center scenario and financial data, complete the Break-Even Excel Template.