Hospital Financial Reporting Project Case MHM 503 Objective: The purpose of this assignment is to evaluate the financial position and condition of Englewood Hospital based on its annual report. You will calculate and interpret financial ratios, as well as research current periodicals and industry reports about the financial position and condition of the hospital entity. Procedures: 1. Financial Position: A. Based on the discussion in the text in Chapter 3, calculate and interpret the liquidity. efficiency, solvency, and profitability ratios from the chapter. Calculations must be done by using Microsoft Excel. Show me how you calculated the ratios using numbers from the report. For example: Current Ratio= Current Assets/Current Liabilities $14,000/$7,000 = 2:1 B. Written analysis that refers to and interprets the ratios (two-three pages required) You can use the Optum ratios from the textbook or HFMA ratios for your analysis. 2. Financial Condition: Using at least THREE sources in addition to your CAFR, describe factors that affect the financial condition of your entity (two-three pages required). These sources can include Internet Websites, newspapers or business periodicals and journals. A reference list MUST be attached to your report. Specifically, you should address each of the following factors to the best of your ability: a. Identify and analyze any issues that you think are the most important with respect to the hospital's financial and operating condition from the annual report and outside research articles. b. Compare the hospital's increase/decrease in net assets (i.e., an operating gain or loss) to its increase/decrease in cash. It may help to look at the Statement of Cash Flows to explain changes in the cash account on the balance sheet. c. Consider information about how the hospital is financed. Did it borrow large amounts of money, issue bond, rely on charitable donations for its financing? Are there any opportunities or threats to the hospital in its financing decisions? Englewood Hospital and Subsidiaries Consolidated Balance Sheets December 31, 2020 and 2019 (In Thousands) 2020 2019 $ 214,518 36,791 79,053 5,199 18,665 7,022 31.660 55,210 83,604 7,093 16.527 8,233 361,248 202,327 18,088 338,939 2,315 81,567 17212 18,584 323,125 2.040 76 275 16.545 819,369 $ 638,896 Assets Current Assets Cash and cash equivalents Short-term investments Patient accounts receivable, net Other receivables Inventories Prepaid expenses and deposits Total current assets Assets limited as to use, net of current portion Property, plant and equipment, net Due from affiliates Interest in net assets of Englewood Health Foundation Other assets Total assets Liabilities and Net Assets Current Liabilities Accounts payable Accrued expenses and other current liabilities Due to affiliates Current portion of estimated amounts due to third-party payors Current portion of long-term debt and capital lease obligations Total current liabilities Accrued pension and postretirement benefit liability Estimated amounts due to third-party payors, net of current portion Long-term debt and capital lease obligations, net of current portion Other liabilities Total liabilities Net Assets Net assets without donor restrictions Net assets with donor restrictions Total net assets Total liabilities and not assets $ 65,664 80,120 1,787 3,975 36,075 51.088 39.946 1.559 455 27 233 187,621 120.281 28,713 25.030 126,666 74.792 29.159 20.928 137,300 15,008 442,822 322,676 294,980 81,567 239,945 76 275 376,547 316 220 $ 819,369 $ 638.896 214,518 36,791 79,053 5,199 18,665 7,022 31,660 55,210 83,604 7,093 16,527 8.233 361,248 202,327 18,088 338,939 2,315 81,567 17,212 819,369 $ 18,584 323,125 2,040 76,275 16,545 638,896 Current Assets Cash and cash equivalents Short-term investments Patient accounts receivable, net Other receivables Inventories Prepaid expenses and deposits Total current assets Assets limited as to use, net of current portion Property, plant and equipment, net Due from affiliates Interest in net assets of Englewood Health Foundation Other assets Total assets Liabilities and Net Assets Current Liabilities Accounts payable Accrued expenses and other current liabilities Due to affiliates Current portion of estimated amounts due to third-party payors Current portion of long-term debt and capital lease obligations Total current liabilities Accrued pension and postretirement benefit liability Estimated amounts due to third-party payors, net of current portion Long-term debt and capital lease obligations, net of current portion Other liabilities Total liabilities Net Assets Net assets without donor restrictions Net assets with donor restrictions Total net assets Total liabilities and net assets 65,664 80,120 1,787 3,975 36,075 51,088 39.946 1,559 455 27 233 120.281 187,621 28,713 25,030 126,666 74,792 29,159 20,928 137,300 15,008 442,822 322,676 239,945 76,275 294,980 81,567 376,547 819,369 $ 316,220 638,896 2020 2019 60.327 $ 56,274 (17.547) 40.581 (112) (5,292) (639) (1,377) 37,931 (584) (10,079) (253) (572) 4.551 (2,138) 2.438 (47) 7.622 114,534 193 (10,855) (908) (289) 854 (10.392) 7.682 (685) 204 471 66,747 Cash Flows From Operating Activities Change in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities: Contributions and equity transfers for capital purposes Depreciation and amortization Net change in unrealized gains and losses on investments Increase in interest in net assets of Englewood Health Foundation Gain on sale of property and equipment Change in pension and postretirement benefit liabilities Changes in operating assets and liabilities: Patient accounts receivable, net Inventories Other receivables, prepaid expenses and deposits and other assets Due to affiliates, net Estimated amounts due to third-party payors Accounts payable, accrued expenses and other liabilities Accrued pension costs Net cash provided by operating activities Cash Flows From Investing Activities Net purchases of property and equipment Change in net assets limited as to use Change in short-term investments, net Net cash used in investing activities Cash Flows From Financing Activities Principal payments on long-term debt and capital lease obligations Proceeds from issuance of short-term debt Principal payments on short-term debt Contributions and equity transfers for capital purposes Net cash provide by (used in) financing activities Net increase in cash and cash equivalents and restricted cash Cash and Cash Equivalents and Restricted Cash, Beginning Cash and Cash Equivalents and Restricted Cash, Ending Supplemental Disclosures of Cash Flow Information Cash paid for interest, net of amount capitalized Supplemental Disclosure of Noncash Investing Assets acquired under capital leases Reconciliation of Cash and Restricted Cash to Balance Sheets Cash and cash equivalents Assets limited as to use Total cash and cash equivalents and restricted cash (41,036) 322 18,531 (22.183) (24.963) (188) (2.297) (27.448) (29.214) (27,651) 25.000 (14,500) 17547 1377 396 (27 837) 182.684 11,462 20,929 32.391 215,075 $ $ 32.391 6.317 $ 6.107 $ 15.077 $ 12.568 $ $ 214,518 557 31,660 731 $ 215,075 $ 32,391 Hospital Financial Reporting Project Case MHM 503 Objective: The purpose of this assignment is to evaluate the financial position and condition of Englewood Hospital based on its annual report. You will calculate and interpret financial ratios, as well as research current periodicals and industry reports about the financial position and condition of the hospital entity. Procedures: 1. Financial Position: A. Based on the discussion in the text in Chapter 3, calculate and interpret the liquidity. efficiency, solvency, and profitability ratios from the chapter. Calculations must be done by using Microsoft Excel. Show me how you calculated the ratios using numbers from the report. For example: Current Ratio= Current Assets/Current Liabilities $14,000/$7,000 = 2:1 B. Written analysis that refers to and interprets the ratios (two-three pages required) You can use the Optum ratios from the textbook or HFMA ratios for your analysis. 2. Financial Condition: Using at least THREE sources in addition to your CAFR, describe factors that affect the financial condition of your entity (two-three pages required). These sources can include Internet Websites, newspapers or business periodicals and journals. A reference list MUST be attached to your report. Specifically, you should address each of the following factors to the best of your ability: a. Identify and analyze any issues that you think are the most important with respect to the hospital's financial and operating condition from the annual report and outside research articles. b. Compare the hospital's increase/decrease in net assets (i.e., an operating gain or loss) to its increase/decrease in cash. It may help to look at the Statement of Cash Flows to explain changes in the cash account on the balance sheet. c. Consider information about how the hospital is financed. Did it borrow large amounts of money, issue bond, rely on charitable donations for its financing? Are there any opportunities or threats to the hospital in its financing decisions? Englewood Hospital and Subsidiaries Consolidated Balance Sheets December 31, 2020 and 2019 (In Thousands) 2020 2019 $ 214,518 36,791 79,053 5,199 18,665 7,022 31.660 55,210 83,604 7,093 16.527 8,233 361,248 202,327 18,088 338,939 2,315 81,567 17212 18,584 323,125 2.040 76 275 16.545 819,369 $ 638,896 Assets Current Assets Cash and cash equivalents Short-term investments Patient accounts receivable, net Other receivables Inventories Prepaid expenses and deposits Total current assets Assets limited as to use, net of current portion Property, plant and equipment, net Due from affiliates Interest in net assets of Englewood Health Foundation Other assets Total assets Liabilities and Net Assets Current Liabilities Accounts payable Accrued expenses and other current liabilities Due to affiliates Current portion of estimated amounts due to third-party payors Current portion of long-term debt and capital lease obligations Total current liabilities Accrued pension and postretirement benefit liability Estimated amounts due to third-party payors, net of current portion Long-term debt and capital lease obligations, net of current portion Other liabilities Total liabilities Net Assets Net assets without donor restrictions Net assets with donor restrictions Total net assets Total liabilities and not assets $ 65,664 80,120 1,787 3,975 36,075 51.088 39.946 1.559 455 27 233 187,621 120.281 28,713 25.030 126,666 74.792 29.159 20.928 137,300 15,008 442,822 322,676 294,980 81,567 239,945 76 275 376,547 316 220 $ 819,369 $ 638.896 214,518 36,791 79,053 5,199 18,665 7,022 31,660 55,210 83,604 7,093 16,527 8.233 361,248 202,327 18,088 338,939 2,315 81,567 17,212 819,369 $ 18,584 323,125 2,040 76,275 16,545 638,896 Current Assets Cash and cash equivalents Short-term investments Patient accounts receivable, net Other receivables Inventories Prepaid expenses and deposits Total current assets Assets limited as to use, net of current portion Property, plant and equipment, net Due from affiliates Interest in net assets of Englewood Health Foundation Other assets Total assets Liabilities and Net Assets Current Liabilities Accounts payable Accrued expenses and other current liabilities Due to affiliates Current portion of estimated amounts due to third-party payors Current portion of long-term debt and capital lease obligations Total current liabilities Accrued pension and postretirement benefit liability Estimated amounts due to third-party payors, net of current portion Long-term debt and capital lease obligations, net of current portion Other liabilities Total liabilities Net Assets Net assets without donor restrictions Net assets with donor restrictions Total net assets Total liabilities and net assets 65,664 80,120 1,787 3,975 36,075 51,088 39.946 1,559 455 27 233 120.281 187,621 28,713 25,030 126,666 74,792 29,159 20,928 137,300 15,008 442,822 322,676 239,945 76,275 294,980 81,567 376,547 819,369 $ 316,220 638,896 2020 2019 60.327 $ 56,274 (17.547) 40.581 (112) (5,292) (639) (1,377) 37,931 (584) (10,079) (253) (572) 4.551 (2,138) 2.438 (47) 7.622 114,534 193 (10,855) (908) (289) 854 (10.392) 7.682 (685) 204 471 66,747 Cash Flows From Operating Activities Change in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities: Contributions and equity transfers for capital purposes Depreciation and amortization Net change in unrealized gains and losses on investments Increase in interest in net assets of Englewood Health Foundation Gain on sale of property and equipment Change in pension and postretirement benefit liabilities Changes in operating assets and liabilities: Patient accounts receivable, net Inventories Other receivables, prepaid expenses and deposits and other assets Due to affiliates, net Estimated amounts due to third-party payors Accounts payable, accrued expenses and other liabilities Accrued pension costs Net cash provided by operating activities Cash Flows From Investing Activities Net purchases of property and equipment Change in net assets limited as to use Change in short-term investments, net Net cash used in investing activities Cash Flows From Financing Activities Principal payments on long-term debt and capital lease obligations Proceeds from issuance of short-term debt Principal payments on short-term debt Contributions and equity transfers for capital purposes Net cash provide by (used in) financing activities Net increase in cash and cash equivalents and restricted cash Cash and Cash Equivalents and Restricted Cash, Beginning Cash and Cash Equivalents and Restricted Cash, Ending Supplemental Disclosures of Cash Flow Information Cash paid for interest, net of amount capitalized Supplemental Disclosure of Noncash Investing Assets acquired under capital leases Reconciliation of Cash and Restricted Cash to Balance Sheets Cash and cash equivalents Assets limited as to use Total cash and cash equivalents and restricted cash (41,036) 322 18,531 (22.183) (24.963) (188) (2.297) (27.448) (29.214) (27,651) 25.000 (14,500) 17547 1377 396 (27 837) 182.684 11,462 20,929 32.391 215,075 $ $ 32.391 6.317 $ 6.107 $ 15.077 $ 12.568 $ $ 214,518 557 31,660 731 $ 215,075 $ 32,391