Assignment 6.1: Profit and Loss

Review the income statement in Table 7.2 from Chapter 7 of your Financial Statements and the DNP: Essential Knowledge for Success textbook.

Table 7.2 Income Statement (Profit and Loss)

$ in 000's

	March 2017	March 2016	Change	1-Year Growth
Gross Patient Revenues
Routine services	$150.000	$142.500	$7.500	Increase5%
Inpatient ancillary	$62.500	$49.350	$13.150	Increase27%
Outpatient ancillary	$118.000	$96,500	$21,500	Increase22%
Other revenue	$2,500	$2,150	$350	Increase16%
Total Gross Revenue	$333,000	$290,500	$42,500	Increase15%
Deductions From Revenue
Bad debt	$18,000	$21,500	$3,500	Decrease16%
Government allowance diagnosis-related group (DRG)	$71,000	$60,800	($10,200)	Increase17%
Insurance contracts managed care	$35,400	$38,400	$3,000	Decrease8%
Charitable allowances	$13,600	$12,500	($1,100)	Increase9%
Total Deductions	$138,000	$133,200	($4,800)	Increase 4%
Net Revenue from Patient	$195,000	$157,300	$45,700	Increase 24%
Operating Expenses
Salaries	$90,250	$79,200	($11,050)	Increase 14%
Benefits	$34,000	$31,800	(2,800)	Increase 7%
Supplies	$27,200	$13,600	($13,600)	Increase 100%
Medical fees	$4,300	$3,200	($1,100)	Increase 34%
Purchased services	$8,400	$5,520	($2,880)	Increase 52%
Maintenance	$7,500	$6,200	($1,300)	Increase 21%
Professional liability	$1,400	$1,350	($50)	Increase 4%
Other	$700	$350	($350)	Increase100%
Depreciation	$7,400	$6,200	($1,200)	Increase 19%
Financing costs	$6,400	$6,100	($300)	Increase 5%
Total Operating Expenses	$187,550	$153,520	$34,030	Increase 22%
Net Income from Operations (pretax)	$7,450	$3,780	$3,670	Increase 97%
% of Net Revenue (Margin) (Net Income/Net Revenue)	3.82%	2.40%	1.42%

Address thefollowing questions:

1. From your analysis, you understand that the net margin for the organization has shown strong growth over the past year. What factor/s is/are driving this improved performance?
2. What concerns do you have regarding current financial performance of this organization? As an executive leader within this organization, what priority issues should this organization address?
3. Is your impression of the reported financial performance generally favorable or unfavorable?