Louisville Community Hospital Ratio Analysis

Healthcare Financial Management and Economics

— Louisville 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 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 by Day 7 of Week 8.