Fluent Essays

Complete all the reading assignments for this course (all 5 modules) prior to beginning work on this assignment. These readings have a direct relation to the case. Read Case 24: River Community Hospital (A), Assessing Hospital Performance, on pp 159-160 of Pink and Song (2018) (Links to an external site.). Write a written report to the hospitals board of trustees (following APA format) detailing answers to the following: Interpret the hospitals statements of cash flows. Present an overview of the hospitals financial position using the Du Pont equation as a guide. Use ratio analysis to identify the hospitals specific financial strengths and weaknesses. Note: The board is not going to appreciate a lengthy dialogue with too many individual ratios. Focus on key findings and one or two ratios per category - dont put them to sleep! Also, use graphs or other techniques to summarize the data. Use operating indicator analysis to identify the operational factors that explain the hospitals current financial condition. Summarize your evaluation of the hospitals financial condition. However, dont just rehash the numbers; rather, present your views on the potential underlying economic and managerial factors that might have caused any problems that surfaced in the financial and operating analysis. Make any recommendations that you believe the hospital should follow to ensure future financial soundness. Prepare your assignment for submission: Follow all applicable APA Guidelines (Links to an external site.) regarding in-text citations, list of cited references, and document formatting for this paper. Failure to properly cite and reference sources constitutes plagiarism. The title page and reference list are not included in the page count for this paper. Proofread your assignment carefully. Improper English grammar, sentence structure, punctuation, or spelling will result in significant point deductions. Reference: For Book Chapters:  Louis Gapenski. (2016). Healthcare Finance: An Introduction to Accounting and Financial Management, Sixth Edition: Vol. Sixth edition. Health Administration Press.  For Pages 159-160 documents: G. Pink, and P. Song (2018). Gapenskis cases in healthcare finance, sixth edition: Sixth edition. Health Administration Press.CHAPTER 201 DEPARTMENTAL COSTING AND COST ALLOCATION Introduction In Chapter 5 we discussed organizational costing, which requires the classification of costs according to their relationship to volume. In this chapter we introduce departmental costing, which requires an additional classification of costs—the relationship between costs and the department being analyzed. In essence, we will see that some costs are unique to the department, while other costs stem from resources that belong to the organization as a whole. Once it is recognized that some costs are organizational in nature rather than department specific, it becomes necessary to create a system that allocates organizational costs to indi- vidual departments. For now, we will focus on costing at the department level. In the next chapter, we will discuss costing (and pricing) of individual service lines. Although some of this chapter’s material is conceptual in nature, much of it involves the application of various allocation techniques. Thus, a considerable portion of the chapter is devoted to examples of cost allocation in different settings. Direct Versus Indirect (Overhead) Costs Some costs—about 50 percent of a health services organization’s cost struc- ture—are unique to the reporting subunit and hence usually can be identified 6 Learning Objectives After studying this chapter, readers will be able to • Differentiate between direct and indirect (overhead) costs. • Explain why proper cost allocation is important to health services organizations. • Define a cost driver and explain the characteristics of a good driver as opposed to a poor one. • Describe the three primary methods used to allocate overhead costs among revenue-producing departments. • Apply cost allocation principles across a wide range of situations within health services organizations. 00_GapenskiReiter (2299).indb 201 11/11/15 11:00 AM Copying and distribution of this PDF is prohibited without written permission. For permission, please contact Copyright Clearance Center at www.copyright.com Co py ri gh t © 2 01 6. H ea lt h Ad mi ni st ra ti on P re ss . Al l ri gh ts r es er ve d. M ay n ot b e re pr od uc ed i n an y fo rm w it ho ut p er mi ss io n fr om t he p ub li sh er , ex ce pt f ai r us es p er mi tt ed un de r U. S. o r ap pl ic ab le c op yr ig ht l aw . EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 8/4/2022 10:22 PM via FRANKLIN UNIVERSITY AN: 1792718 ; Louis Gapenski.; Healthcare Finance: An Introduction to Accounting and Financial Management, Sixth Edition Account: s8879308 H e a l t h c a r e F i n a n c e202 with relative certainty. To illustrate, consider a hospital’s clinical laboratory department. Certain costs are unique to the department: for example, the salaries and benefits for the managers and technicians who work there and the costs of the equipment and supplies used to conduct the tests. These coCHAPTER 75 THE INCOME STATEMENT AND STATEMENT OF CHANGES IN EQUITY Introduction Financial accounting involves identifying, measuring, recording, and com- municating in dollar terms the economic events and status of an organization. This information is summarized and presented in a set of financial statements, or just financials. Because these statements communicate important informa- tion about an organization, financial accounting is often called “the language of business.” Managers of health services organizations must understand the basics of financial accounting because financial statements are the best way to summarize a business’s financial status and performance. Historical Foundations of Financial Accounting It is all too easy to think of financial statements merely as pieces of paper with numbers written on them, rather than in terms of the economic events and physical assets—such as land, buildings, and equipment—that underlie the Financial accounting The field of accounting that focuses on the measurement and communication of the economic events and status of an entire organization. 3 Learning Objectives After studying this chapter, readers will be able to • Explain why financial statements are so important both to managers and to outside parties. • Describe the standard-setting process under which financial accounting information is created and reported, as well as the underlying principles applied. • Describe the components of the income statement—revenues, expenses, and profitability—and the relationships within and among these components. • Explain the differences between operating income and net income, and between net income and cash flow. • Describe the format and use of the statement of changes in equity. 00_GapenskiReiter (2299).indb 75 11/11/15 11:00 AM Copying and distribution of this PDF is prohibited without written permission. For permission, please contact Copyright Clearance Center at www.copyright.com Co py ri gh t © 2 01 6. H ea lt h Ad mi ni st ra ti on P re ss . Al l ri gh ts r es er ve d. M ay n ot b e re pr od uc ed i n an y fo rm w it ho ut p er mi ss io n fr om t he p ub li sh er , ex ce pt f ai r us es p er mi tt ed un de r U. S. o r ap pl ic ab le c op yr ig ht l aw . EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 8/4/2022 10:13 PM via FRANKLIN UNIVERSITY AN: 1792718 ; Louis Gapenski.; Healthcare Finance: An Introduction to Accounting and Financial Management, Sixth Edition Account: s8879308 H e a l t h c a r e F i n a n c e76 numbers. If readers of financial statements understand how and why finan- cial accounting began and how financial statements are used, they can better visualize what is happening within a business and why financial accounting information is so important. Many thousands of years ago, individuals and families were self-contained in the sense that they gathered their own food, made their owCHAPTER 639 FINANCIAL CONDITION ANALYSIS Introduction One of the most important characteristics of a healthcare organization is its financial condition: Does the business have the financial capacity to perform its mission? Many judgments about financial condition are made on the basis of financial statement analysis, which focuses on the data contained in a busi- ness’s financial statements. Financial statement analysis is applied to historical data, which reflect the results of past managerial decisions, and to forecasted data, which constitute the road map for the business’s future. Thus, managers use financial statement analysis both to assess current condition and to plan for the future. Although financial statement analysis provides a great deal of important information regarding financial condition, it fails to provide much insight into the operational causes of that condition. Thus, financial statement analysis is often supplemented by operating indicator analysis, which uses operat- ing data not usually found in an organization’s financial statements—such as occupancy, patient mix, length of stay, and productivity measures—to help identify factors that contributed to the assessed financial condition. Through operating indicator analysis, managers are better able to identify and implement strategies that ensure a sound financial condition in the future. Financial statement analysis The process of using data contained in financial statements to make judgments about a business’s financial condition. Operating indicator analysis The process of using operating indicators to help explain a business’s financial condition. 17 Learning Objectives After studying this chapter, readers will be able to • Explain the purposes of financial statement and operating indicator analyses. • Describe the primary techniques used in financial statement and operating indicator analyses. • Conduct basic financial statement and operating indicator analyses to assess the financial condition of a business. • Describe the problems associated with financial statement and operating indicator analyses. • Describe how key performance indicators (KPIs) and dashboards can be used to monitor financial condition. 00_GapenskiReiter (2299).indb 639 11/11/15 11:01 AM Copying and distribution of this PDF is prohibited without written permission. For permission, please contact Copyright Clearance Center at www.copyright.com Co py ri gh t © 2 01 6. H ea lt h Ad mi ni st ra ti on P re ss . Al l ri gh ts r es er ve d. M ay n ot b e re pr od uc ed i n an y fo rm w it ho ut p er mi ss io n fr om t he p ub li sh er , ex ce pt f ai r us es p er mi tt ed un de r U. S. o r ap pl ic ab le c op yr ig ht l aw . EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 8/4/2022 10:08 PM via FRANKLIN UNIVERSITY AN: 1792718 ; Louis Gapenski.; Healthcare Finance: An Introduction to Accounting and Financial CHAPTER 3 HEALTHCARE FINANCE BASICS Introduction In today’s healthcare environment, where financial realities play an important role in health services decision making, it is vital that managers at all levels understand the basic concepts of healthcare finance and how these concepts are used to enhance the financial well-being of the organization. In this chapter, we introduce readers to the book, including its purpose, goals, and organi- zation. Furthermore, we present some basic background information about healthcare finance and the health services system. We sincerely hope that this book will be a significant help to you in your quest to increase your profes- sional competency in the important area of healthcare finance. Before You Begin Before you begin the study of healthcare finance, here are a few tips about the book that will make the process easier. 1 Learning Objectives After studying this chapter, readers will be able to • Describe the organization of this book and the learning aids contained in each chapter. • Define the term healthcare finance as it is used in this book. • Describe the key characteristics of a business. • Discuss the structure of the finance department, the role of finance in health services organizations, and how this role has changed over time. • Describe the major players in the health services industry. • List the key operational issues currently faced by healthcare managers. • Describe the alternative forms of business organization and corporate ownership and their organizational goals. • Discuss the key elements of healthcare reform and its expected effect on the provision of health services. 00_GapenskiReiter (2299).indb 3 11/11/15 11:00 AM Copying and distribution of this PDF is prohibited without written permission. For permission, please contact Copyright Clearance Center at www.copyright.com C o p y r i g h t 2 0 1 6 . H e a l t h A d m i n i s t r a t i o n P r e s s . A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w . EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 7/2/2022 4:06 PM via FRANKLIN UNIVERSITY AN: 1792718 ; Louis Gapenski.; Healthcare Finance: An Introduction to Accounting and Financial Management, Sixth Edition Account: s8879308.main.ehost H e a l t h c a r e F i n a n c e4 Purpose of the Book Many books cover the general topics of accounting and financial management, so why is a book needed that focuses on healthcare finance? The reason is that while all industries have certain individual characteristics, the health services industry is truly unique. For example, the provision of healthcare services is dominated by not-for-profit corporations, both private an