MECHANISMS FOR EVALUATING FINANCIAL HEALTH OF HEALTH CARE ORGANIZATIONS

The board of directors of Pearland Medical Center is working on a strategic financial plan for its Urology Surgery Hospital facility. One of the strategic goals is to build a new $1 million prostate cancer research wing in five years. The board is concerned that current economic conditions might reduce revenues over the next five years and they are uncertain about the fate of the planned construction project. You are a part of the team tasked with conducting a capital budgeting analysis. Urology Surgery Hospital reported $1.5 million in revenue in 2012 and $1.3 million in 2013. The hospital’s equity was $2 million in 2013; the equity was $2.41 million in 2012. The hospital received delayed third-party payments in 2013 of $500,000. The hospital received $250,000 in grants in 2013. The hospital’s current liabilities included operating costs of $1 million in 2012 and $1.2 million in 2013. In addition, the hospital retired $150,000 of debt in 2012 and 2013 (though it still held $750,000 in debt in 2013, compared to long-term debt of $900,000 in 2012). The hospital funded the employee pension plan with matching funds of $150,000 in both 2012 and 2013. Malpractice costs were $150,000 in 2012 and 2013. Depreciation expenses were $100,000 in 2012 and $105,000 in 2013. The hospital is a nonprofit facility so it incurs no tax liabilities. Income Worksheet ASSETS LIABILITIES NET WORTH 2012 2013 2012 2013 2012 2013 Operating expenses 1,000,000 1,200,000 Debt retirement 150,000 150,000 Retirement plan 150,000 150,000 Malpractice costs 150,000 150,000 Depreciation 100,000 105,000 Long term debt 900,000 750,000 Net worth (Total equity) 2,410,000 2,000,000 Revenue 1,500,000 1,300,000 Equipment and fixtures 1,000,000 1,000,000 Delayed payments 0.00 500,000 Grants 0.00 250,000 Cash in bank 2,360,000 1,455,000 Using the format below, on page 1 of your paper, create a balance sheet as of December 31, 2012, and a balance sheet as of December 31, 2013. Compose them in a table, next to each other, so it will be convenient to compare. You can copy/paste the table below into a Word document. Calculate the Current Ratio, Working Capital, and Leverage (or Debt/Worth Ratio) for 2012 and 2013 (include those in your paper). 3. Discuss the financial trends you believe the board should note in their planning. Urology Surgery Hospital Balance Sheet as of Dec 31, 2012 Urology Surgery Hospital Balance Sheet as of Dec 31, 2013 Assets Current Assets Cash in Bank Revenue Delayed Payments Grants Total Current Assets Fixed Assets Equipment and Fixtures (less Depreciation) Total Fixed Assets Total Assets Liabilities Current Liabilities Operating Expenses Debt Retirement Retirement Plan Malpractice Costs Total Current Liabilities Long-Term Liabilities Long-Term Debt Total Liabilities Net Worth (Total Equity) Total Liability and Net Worth SLP Assignment Expectations Assignment Expectations, in order to earn full credit: Length: 3–4 pages, excluding title page and references. Assessment and Grading: Your paper will be assessed based on the grading rubric that is linked within the course. Privacy Policy | Contact