Week 8 Assignment1 Louisville Community Hospital

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Healthcare Financial Management and Economics

Assignment1: 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 Louisville Community Hospital and analyze the organization’s financial health.

Louisville Community Hospital

Louisville Community Hospital is a small community hospital serving a rural population.

Louisville 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		$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

Louisville Community Hospital
Balance Sheet (in thousands)
for the Years Ended December 31, 2016 and 2017
	2016		2017
Current assets
Cash and cash equivalents	$700		$500
Net patient receivables	4,000		3,500
Inventory	950		750
Total current assets	5,650		5,250
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		21,250
Current liabilities
Accounts payable	2,500		2,000
Accrued expenses	900		750
Total current liabilities	3,400		2,750
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		$21,250

To prepare for this Assignment:

Examine the financial statements from Louisville 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:

Using the statement of operations and balance sheet for Louisville Community Hospital, complete the Week 8 Ratio Excel Template located in the Week 8 Learning Resources.

Your Assignment is due byDay 7 of Week 8.