Financial Data Analysis
July 14, 2014
Financial Data Analysis
Patton - Fuller Community Hospital |
Balance Sheet as of December 31 |
2009 and 2008 |
(In thousands) |
2009 | 2008 |
Current Assets |
Cash and Cash Equivalents | $22,995 | $41,851 |
Assets of Limited Use | $27,594 | $41,851 |
Patient Accounts Receivable (1) | $58,787 | $37,666 |
(net of Allowance for Bad Debts 2009: $11,757 / 2008: $7,533) |
Other Receivables (3rd party payer settlements | - | $87 |
Inventories | $18,396 | $8,370 |
Prepaid Expenses | $95 | $201 |
Total Current Assets | $127,867 | $130,026 |
Other Assets |
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One widely accepted method of assessing financial statements is ratio analysis, which uses data from the balance sheet and income statement to produce value that is easily interpreted for financial meaning. Most hospitals, health systems and other healthcare organizations routinely evaluate their financial condition by calculating various ratios and comparing the values to those for previous periods, looking for differences that could indicate a meaningful change in financial condition. Many healthcare organizations also compare their own ratio values to those for similar organizations, looking for differences that could indicate weaknesses or opportunities for improvement. PFCH is a for-profit hospital and is owned by physicians active at the facility. Quality patient care is the key to the hospitals success and as shareholders in PFCH; the physicians are motivated to provide the best patient care possible. According to the CFO of PFCH, their commitment to quality patient care has allowed them to grow to where they are today. As a 600-bed, full-service hospital, Patton – Fuller Community Hospital is the premier healthcare facility in the Northwest Valley. Owned by the physicians that are active at the hospital, the organization is governed by a 14 member board of directors, comprised of 12 physician-owners, with the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) as non-voting members. The physician members serve 3-year terms and choose four new members every December during the annual shareholder meeting. The shareholder meeting is also when profits are distributed to the physician owners.Patton – Fuller Community Hospital derives 80% of its revenue from inpatient activity, the remaining 20% of its revenue is derived from the Emergency Department and other outpatient services. The facility experiences the typical seasonal fluctuations, with the winter months producing the heavier workload and the summer months being less busy. Staffing is adjusted for census and workload, and other expenses also fluctuate. In 2009, PFCH experienced some significant events which were reflected in the financial statements. In 2008, the PFCH community mourned the passing of Abigial Baderman, a long-time benefactor of the hospital. In December 2009, pursuant to the probate of her will, the hospital received a bequest from her estate, recognized as an unrestricted donation ($1,000,000 is shown on the interim statement of income in December). |
Declines in the stock market and real estate markets resulted in a sharp drop in the return on investment income. This caused PFCH to reassess the value of its investments and, on their auditors’ advice, to write down those assets. This was reflected in the Interim Statement of Income in November and is a “one-time” loss.
An annual inventory in December revealed that supply expenses were underestimated by $1,000,000. That cost was added to December’s statement.
Following the favorable...