Case Study 2: Financial Statements Operating Revenue Net Patient Service Revenue $ 1,265,000 Other Revenue 275,700 Total Operating Revenue 1,540,700 Operating Expenses Salary, Wages, & Fringe Benefits 1,550,400 Provision for Bad Debts 65,000 Depreciation 8,000 Other Expenses 60,000 Total Operating Expenses 1,683,400 Income (loss) from operation $ (142,700) Non-Operating Gains (losses) Total Non-operating Gains (losses) 35,000 Net Income / (Loss) $ (107,700) Income Statement - End of Year Assets: Cash and cash equivalents $ 450,000 Patient Accounts Receivable 210,800 Prepaid Expenses 5,000 Total Current Assets 665,800 Property, Plant & Equipment 32,000 Total Non- Current Assets 32,000 Total Assets $ 697,800 Liabilities and Equity: Accounts Payable and accrued expenses 42,800 Total Current Liabilities 42,800 Long-term Debt 90,000 Total Non-Current Liabilities 90,000 Unrestricted net assets 565,000 Total Equity 565,000 Total Liabilities and Equity $ 697,800 Balance Sheet - End of Year Financial Indicators: Working Capital $ 623,000 Current Ratio 15.6 Days in Patient A/R 60.8 Days Cash on Hand 98.0 Other Metrics: Unbilled A/R $ 31,600 % in A/R more than 90 days 23% For case study number 2, a non-profit community health center's balance sheet is shown above. The board has to make some strategic decisions related to recruiting an additional physician. It is estimated that the cost would be $300,000 for salary (benefits and two new medical assistants to support the doctor) and generally the A/R for the new physician would take about 6 months due to getting the new provider credentialed (e.g., Medicare Provider number, added to managed care contracts, etc.). The revenue associated with the new provider is estimated to be $200,000 (net) in months 7-12; after that, the net revenue should be about $450,000 (net) per year. Questions Summarize CS #2 Are there items treated as expenses in the income statement but do not require any expenditure of cash in the present period? What could the practice do with the extra cash? What are the implications in relation to that decision? If you were the administrator of the practice, do you have any recommendations or do you feel financial management is going well?