In order to deliver and maintain quality medical services, hospitals should be in sound financial condition. The HFMA releases annually key hospital financial statistics and ratio medians for a select group of metrics (see Illustration 16–7).

Required
a. Select a hospital located in your region or state and locate its most recent audited financial report. Audited financial statements might be available on the hospital’s website. Alternatively, if the hospital has tax-exempt bonds,audited financial statements can be obtained at https://emma.msrb.org/.
1. Calculate the following financial statistics for the most recent year: operating margin, current ratio, accounts receivable (days), debt-to capitalization, and average age of plant (years).
2. Benchmark data from the HFMA suggest the following hospital median thresholds: operating margin greater than 3 percent, current ratio of at least 2, accounts receivable (days) of less than 56, debt-to-capitalization of less than 32 percent, and average age of plant (years) less than 12. How does your chosen hospital compare to the thresholds?
b. Overall, how would you assess the financial condition of your chosen hospital? Are there any other metrics you would want to consider when assessing the financial and operational effectiveness of the hospital?

Data From Problem 16-7

Tupper Memorial Hospital received from a donor a $50,000 contribution and a $50,000 pledge payable in one year. The donor required that the funds be used for heart research. Explain differences in accounting for the donor’s contribution and pledge if Tupper is (a) a government hospital and (b) a not-for profit hospital.