The healthcare balance sheet used for this analysis is for John Hopkins Hospital 2014 . financial year. The balance sheet contains crucial information such as Assets, Liabilities and shareholder’s equity which is essential for determining a company’s financial health. The total asset for the institution stood at $2850956000 compared to $ 2769848000 ( John Hopkins Hospital, 2014 ). Which represents a 2.9 percent growth. The total liabilities for the 2013 year stood at $1608645000 compared to $1798380000 in 2012, indicating a decrease. Additionally, the total stockholder equity stood at a total value of $157808000 ( John Hopkins Hospital, 2014 ).
The impression of the balance sheet is that the company grew between 2012 and 2013. This is a significant increase in numbers from one year to another. The subsequent increase in liabilities indicates that a good proportion of assets came from debt which is evidenced by long term debt increase from $708198000 to $784261000 which is an increase of 10.7 percent. The healthcare balance has given several features that can be used to determine liquidity ratios. The ratios are reflective of the ability of a firm to service its current obligation (Baker, Baker, & Dworkin, 2017). For John Hopkins Hospital , the current ratio which is the ratio of current assets to current liabilities stands at 1.77. The ratio is good and indicates the institution is healthy. The balance sheet also contains crucial information that can be used to compute the quick ratio. The quick ratio is a more credible way of determining the short-term solvency compared to the current ratio method since it indicates the whether a firm is capable servicing short term debts at that particular moment (Baker et al, 2017). It is determined by dividing the sum of cash and cash equivalent (CCE) and net receivables with the current liabilities. In our case, CCE for the year 2013 was $88752000 and the pledges receivables were $10146000, giving a quick ratio of 0.06. A quick ration indicates that the company has a fast-moving inventory and company should focus on its assets to grow its revenue. The data given in the balance sheet is enough to help one compute the financial health if this healthcare institution. There is no need for additional information.
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The healthcare organizations have revenue sources from different sources such as donations, operations, and interest income. The revenue from the operation is received for services. For John Hopkins Hospital, the net revenue originated from patients, third party payors and other services such as restorative adjustments. Patient service revenue from third party payors totaled $1779870 while self-pay stood at $61,226. The payor mix for the John Hopkins Hospital in 2014 had Medicare program accounting for 22 percent, followed by Health Maintenance Organization at 18 percent, Commercial at 15 percent. Other notable payors in the mix are Blue cross and Blue shield of Maryland, Medicaid programs as well as other self-pay and third party payors. For the year ending in 2013, the payors from third parties was $1779870, and increase from the previous financial year which stood at $1597592. Whisler, (2017) observes that in the near future, the swelling Medicare enrollment means that health organization payer mix will tilt towards lower-paying government-run programs. Consequently, the expected large gap between private and public payers, a small alteration in the mix will have a significant impact on margins.
References
Baker, Baker, R. W., & Dworkin, N. R. (2017). Health Care Finance (5th ed.). Burlington, MA: Jones & Bartlett Learning.
John Hopkins Hospital. (2014). John Hopkins Hospital-Financial Statements. Retrieved from https://hscrc.state.md.us/Documents/Hospitals/ReportsFinancial/Audited/fy-2013/JHH_AFS_2013.pdf
Whisler, J. (2017, November 6). By 2025, costs, regs, changing payer mix will drive innovative partnerships. Retrieved from https://blogs.deloitte.com/centerforhealthsolutions/by-2025-costs-regs-changing-payer-mix-will-drive-innovative-partnerships/
