Question

Gapenski’s Fundamentals of Healthcare Third Edition. Income statement which is Exhibit 11.2 on page 327 and balance sheet which is Exhibit 12.2 on page 356.

List the changes from 2015 to 2016 relating to income and expenses, balance sheet cash flow statement and hypothetical situations of why changes occurred between 2015 and 2016. Make recommendations of future financial sustainability based on these documents.

Gapenski's Fundamentals of Healthcare Finance 356 EXHIBIT 12.2 2016 2015 Good Samaritan Medical Center ASSETS Balance Sheets as Current assets of December 31, 2016 and 2015 (in Thousands) S 12.102 $ 6,486 Cash and cash equivalents 10,000 Short-term investments 5.000 28,509 Net patient accounts receivable 25.927 3.695 Inventories 2.302 $ 54.306 Total current assets $39.715 Long-term investments 54,059 31,837 Net property and equipment 52,450 49.549 $160,815 Total assets $121,101 LIABILITIES AND NET ASSETS Current liabilities Notes payable $ 4.334 $ 3.345 Accounts payable 6,933 5,022 Accrued expenses 6,069 5.037 Total current liabilities S 15,425 $15.315 Long-term debt 85.322 53.578 Total liabilities $100,747 $68,893 Net assets Unrestricted $54,068 $46,208 Temporarily restricted 1,000 1,000 Permanently restricted 5,000 5,000 Total net assets $60,068 $52,208 Total liabilities and net assets $160,815 $121,101 sheets look quite similar. The primary difference is in the labeling and reporting of equity (equity is called net assets ina not-for-profit), topic that will be discussed further in the sections that follow In the following sections, we discuss the structure and individual balance sheet accounts in more detail.

Answer 1

Income Statement
	2016	2015	Change in %
Operating Revenues
Patient Service Revenue	150118	123565	21.49
Less: Bad Debts	2000	1800	11.11
Net patient service revenue	148118	121765	21.64
Premium revenue	18782	1645	1041.76
Other revenue	3079	2704	13.87
Net operating revenues	169979	126114	34.78
Expenses
Salaries and benefit	126223	102334	23.34
Supplies	20568	18673	10.15
Insurance	4518	3710	21.78
Lease	3189	2603	22.51
Depreciation	6405	5798	10.47
Interest	5329	3476	53.31
Total Expense	166232	136594	21.70
Operating Income	3747	4330	-13.46
Non-operating income	243	198	22.73
Investment income	3870	3678	5.22
Total non-operating income	4113	3876	6.11
Net income	7860	8206	-4.22

Recommendations:

Despite the increase in net operating revenue and total non-operating income, the company’s net profit has been depleted by 4.22% due to an increase in expenses and a decrease in operating income. So, it recommended decreasing the expenses especially with respect to interest paid, employee benefits, negotiate on lease cost and insurance.

Balance Sheet
	2016	2015	Change in %
Assets
Current assets
Cash and Cash Equivalent	12102	6486	86.59
Short-term investment	10000	5000	100.00
Net patient account receivable	28509	25927	9.96
Inventories	3695	2302	60.51
Total current assets	54306	39715	36.74
Long term investment	54059	31837	69.80
Net property and equipment’s	52450	49549	5.85
Total assets	160815	121101	32.79
Liabilities and Net Assets
Current Liabilities
Notes payable	4334	3345	29.57
Accounts payable	5022	6933	-27.56
Accrued expenses	6069	5037	20.49
Total current liabilities	15425	15315	0.72
Long term debt	85322	53578	59.25
Total liabilities	100747	68893	46.24
Net assets
Unrestricted	54068	46208	17.01
Temporarily unrestricted	1000	1000	0.00
Permanently restricted	5000	5000	0.00
Total net assets	60068	52208	15.06
Total liabilities and net assets	160815	121101	32.79

Recommendation:

Despite there is a considerable total net asset by 15.06%, if the liabilities are reduced especially with respect to long term debts, notes payable and accrued expenses the company could gain an additional asset value.