BOBCAT INTEGRATED DELIVERY SYSTEM

CASE STUDY

It is December 2014, and you have just accepted the CFO position at Bobcat Integrated Delivery System (IDS). You will be reporting to Mr. Salter, Bobcat IDS chief executive officer, a retired school teacher who was hired last year. Also reporting to Mr. Salter, and Mr. Wannabe, Bobcat IDS chief operating officer; Dr. Spok, Bobcat IDS medical director; and Ms. Patty Care, Bobcat IDS director of nursing. When announcing your appointment, Mr. Salter stated that your primary objective in the coming year (2015) would be to reverse the ominous financial trend which began in 2013 with an operating loss and continued in 2014. Previous operating losses were funded with investment income (however, investment income was $200,000 in 2014 because of weakening conditions). Moreover, your board recently passed a resolution discontinuing that practice and restricting investment income to capital expenditures.Bobcat IDS is a not-for-profit corporation and includes a 120 - bed acute care hospital, a 25 - bed skilled nursing facility, a 15 - bed rehab facility, a home health care agency, and an out- patient clinic. The hospital, Bobcat Community Hospital (BCH), is the only hospital in Bobcat, a rural community of 50,000 in your state. To acquire background information, you decide to meet with each member of the executive team first, and then meet with selected members of senior management.

1) Develop a 2014 statement of operations and a 2014 balance sheet (you can assume the format and numbers are correct on the 2013 balance sheet, and you can further assume that all balances carry forward to the 2014 balance sheet, with the exception of accounting for the 2014 loss from the statement of operations).

Bobcat IDS balance Sheet as of December 31, 2013

2013 Assets

Current Assets

Cash and cash equivalents $178,750

Marketable securities 1,100,500

Accounts receivable less allowance 11,250,000

Inventories at cost 3,368,000

Other current assets 992,500

Total Current Assets 16,889,750

Land and improvements 3,250,000

Buildings 36,485,750

Fixed equipment 8,063,250

Moveable equipment 4,466,750

Property, Plant & Equipment 52,265,750

Less accumulated depreciation (18,080,750)

Total Property, Plant & Equipment 34,185,000

TOTAL ASSETS $ 51,074,750

Liabilities and Net Assets

Current Liabilities

Current portion of long-term debt $2,151,000

Accounts payable and accrued expenses 5,400,000

Estimated amounts due to third-party payers 1,423,750

Other current liabilities 1,500,000

Total Current Liabilities 10,474,750

Long-term debt, net of current portion 37,000,000

TOTAL LIABILITIES 47,474,750

Net Assets

Unrestricted 2,100,000

Temporarily restricted 1,000,000

Permanently restricted 500,000

TOTAL NET ASSETS 3,600,000

TOTAL LIABILITIES & NET ASSETS $51,074,750

Bobcat IDS Actual Expenses through December 31, 2014

Wages, taxes, benefits $42,000,000

Professional fees and commissions 3,000,000

Drugs 4,000,000

Medical and other supplies 4,000,000

Food 2,000,000

Purchased services 2,000,000

Repairs and maintenance 4,000,000

Utilities 2,000,000

Interest 4,019,000

Depreciation 6,500,000

TOTAL EXPENSES $ 73,519,000