Posted: March 1st, 2014

Health Care Financial Management Assignment

Health Care Financial Management Assignment

Answer your questions in an MS word and/or MS Excel document and upload in the Assignment Folder–Midterm Exam in Blackboard.

If you answer in an Excel spreadsheet, please make sure you format properly so it prints in a presentable way. If you print your spreadsheet before you turn it in to me, you can see if your answers are printed in a presentable format.Write your names on all pages of your document (if you write your name in the header of the page, it will appear on all pages). Save your documents using the following convention:yourlastname_midterm

Questions:

1. (10 points) What are the primary differences between investor-owned and not-for-profit corporations?

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1. (15 points) Discuss, in general terms, three reimbursement methods used by third-party payers and the incentives and risks that they create for providers.

1. (10 points) NewAge Hospital generated net patient revenues of $145M for 2012, and its cash collections were $125M. The revenue cycle management costs to collect these revenues were $5M.
   1. Compute NewAgeHospital’s cost to collect for the year and provide an assessment of how it compares with the industry benchmark of 3%.
   2. Compute NewAge Hospital’s cost to collect for the year if 25% of the cash collections during the year required human intervention and its EDI costs were $500,000. Provide an assessment of how it compares with the industry benchmark of 4%.

1. (10 points) Use ratio analysis to identify Riverview Community Hospital’s (Case Study) specific financial strengths and weaknesses. Focus on key findings and one or two ratios per category.

1. (15 points) Answer the following questions:
   1. What is the agency problem?
   2. What are the generally accepted accounting principles (GAAP?
   3. What are the purposes of a journal and a ledger?
   4. What is the difference between operating income and net income?
   5. What is the difference between liabilities and equity?

1. (15 points) Given the information in the following table, compute the days in accounts receivable, aging schedule, and accounts receivables a percentage of net patient revenues for Quarter 3 and Quarter 4 of 2012. Compare the two quarters to determine if the organization’s collection procedure is improving. Assume each month is 30 days.  (Dollar figures are in thousands).

1. (25 points) Given the balance sheets and statement of operations for 270-bed Rocky Hill Hospital for 2011 and 2012, compute liquidity, profitability, activity and capital structure ratios and compare them with the industry benchmarks. The debt principal payments for each year are $5.5 million. Adjusted discharges for 2011 and 2012 are 19,000 and 20,000 respectively.

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