1. The Hospital System Metropolis Health System (MHS) offers comprehensive healthcare services. It is a mid- size taxing district hospital. Although MHS has the power to raise revenues through taxes, it has not done so for the past seven years. 2. The Area MHS is located in the town of Metropolis, which has a population of 50,000. The town has a small college and a modest number of environmentally clean industries. 3. MHS Services MHS has taken significant steps to reduce hospital stays. It has developed a comprehen- sive array of services that are accessible, cost-effective, and responsive to the community's needs. These services are wellness oriented in that they strive for prevention rather than treatment. As a result of these steps, inpatient visits have increased overall by only 1,000 per year since 2010 whereas outpatient/same-day surgery visits have had an increase of over 50,000 per year. A number of programmatic, service, and facility enhancements support this major transi- tion in the community's institutional health care. They are geared to provide the quality. convenience, affordability, and personal care that best suit the health needs of the people whom MHS serves. Rehabilitation and Wellness Center-for outpatient physical therapy and return-to- work services, plus cardiac and pulmonary rehabilitation, to get people back to a nor- mal way of living. Home Health Services-bringing skilled care, therapy, and medical social services into the home; a comfortable and affordable alternative in longer-term care. Same-Day Surgery (SDS)-eliminating the need for an overnight stay. Since 2010 same-day surgery procedures have doubled at MHS. Skilled Nursing Facility-inpatient service to assist patients in returning more fully to an independent lifestyle. The medical staff's quality improvement program has begun a care path initiative to track effective means for diagnosis, treatment, and follow-up. This initiative will help avoid unnecessary or duplicate use of expensive medications or technologies. 9. MHS Foundation Metropolis Health Foundation is presently being created to serve as the philanthropic arm of MHS. It will operate in a separate corporation governed by a board of 12 com- munity leaders and supported by a 15-member special events board. The mission of the foundation will be to secure financial and nonfinancial support for realizing the MHS vision of providing comprehensive health care for the community. Funds donated by individuals, businesses, foundations, and organizations will be desig- nated for a variety of purposes at MHS, including the operation of specific departments, community outreach programs, continuing education for employees, endowment, equip- ment, and capital improvements. 10. MHS Volunteer Auxiliary There are 500 volunteers who provide over 60,000 hours of service to MHS each year. These men and women assist in virtually every part of the system's operations. They also conduct community programs on behalf of MHS. The auxiliary funds its programs and makes financial contributions to MHS through money it raises on renting televisions and vending gifts and other items at the hospital. In the past, its donations to MHS have generally been designated for medical equipment purchases. The auxiliary has given $250,000 over the last five years. 11. Planning the Future for MHS The MHS has identified five areas of desired service and programmatic enhancement in its five-year strategic plan: 1. Ambulatory Services II. Physical Medicine and Rehabilitative Services III. Cardiovascular Services IV. Oncology Services V. Community Health Services MHS has set out to answer the most critical health needs that are specific to its commu- nity. Over the next five years, the MHS strategic plan will continue a tradition of quality, community-oriented health care to meet future demands. 12. Financing the Future MHS has established a corporate depreciation fund. The fund's purpose is to ease the financial burden of replacing fixed assets. Presently, it has almost $2 million for needed equipment and renovations. BUDY Exhibit 33-1 Balance Sheet Assets Current Assets Cash and Cash Equivalents Assets Whose Use Is Limited Patient Accounts Receivable 7,400,000 (Net of $1,300,000 Allowance for Bad Debts) Other Receivables Inventories Prepaid Expenses Total Current Assets Assets Whose Use Is Limited Corporate Funded Depreciation Held by Trustee Under Bond Indenture Agreement Total Assets Whose Use Is Limited Less Current Portion Net Assets Whose Use Is Limited Property, Plant, and Equipment, Net Metropolis Health System Balance Sheet March 31, 2 Other Assets Total Assets $1,150,000 825,000 150,000 900,000 200,000 10,625,000 1,950,000 1,425,000 3,375,000 (825,000) 2,550,000 19,300,000 325,000 $32,800,000 Liabilities and Fund Balance Current Liabilities Current Maturities of Long-Term Debt Accounts Payable and Accrued Expenses Bond Interest Payable Reimbursement Settlement Payable Total Current Liabilities Long-Term Debt Less Current Portion of Long-Term Debt Net Long-Term Debt Total Liabilities Fund Balances General Fund Total Fund Balances Total Liabilities and Fund Balances $525,000 4,900,000 300,000 100,000 5,825,000 6,000,000 (525,000) 5,475,000 11,300,000 21,500,000 21,500,000 $32,800,000 Exhibit 33-2 Statement of Revenue and Expense Metropolis Health System Statement of Revenue and Expense for the Year Ended March 31, 2 Revenue Net patient service revenue Other revenue Total Operating Revenue Expenses Nursing services Other professional services General services Support services Depreciation Amortization Interest Provision for doubtful accounts Total Expenses Income from Operations Nonoperating Gains (Losses) Unrestricted gifts and memorials $34,000,000 1,100,000 $35,100,000 $5,025,000 13,100,000 3,200,000 8,300,000 1,900,000 50,000 325,000 1,500,000 $20,000 80,000 Interest income Nonoperating Gains, Net Revenue and Gains in Excess of Expenses and Losses $3,400,000 $1,700,000 100,000 $1,800,000 hibit 33-4 Statement of Changes in Fund Balance General Fund Balance April 1, 2 Revenue and Gains in Excess of Expenses and Losses General Fund Balance March 31, 2, Exhibit 33-5 Schedule of Property, Plant, and Equipment Metropolis Health System Statement of Changes in Fund Balance for the Year Ended March 31, 2 Equipment Buildings and Improvements Land Improvements Total Metropolis Health System Schedule of Property, Plant, and Equipment for the Year Ended March 31, 2 Land Less Accumulated Depreciation Net Depreciable Assets Construction in Progress Net Property, Plant, and Equipment $19,700,000 1,800,000 $21,500,000 $14,700,000 1,100,000 28,900,000 $44,700,000 (26,100,000) $18,600,000 480,000 220,000 $19,300,000 Exhibit 33-6 Schedule of Patient Revenue Metropolis Health System Schedule of Patient Revenue for the Year Ended March 31, 2 Patient Services Revenue Routine revenue Laboratory Radiology and CT scanner OB-nursery Pharmacy Emergency service Medical and surgical supply and IV Operating rooms Anesthesiology Respiratory therapy Physical therapy EKG and EEG Ambulance service Oxygen Home health and hospice Substance abuse Other Subtotal Less allowances and charity care Net Patient Service Revenue $9,850,000 7,375,000 5,825,000 450,000 3,175,000 2,200,000 5,050,000 5,250,000 1,600,000 900,000 1,475,000 1,050,000 900,000 575,000 1,675,000 375,000 775,000 $48,500,000 (14,500,000) $34,000,000 ir 33-7 Schedule of Operating Expenses Nursing Services Routine Medical/Surgical Operating Room Intensive Care Units OB-Nursery Other Tocal Metropolis Health System Schedule of Operating Expenses for the Year Ended March 31, 2 Other Professional Services Laboratory Radiology and CT Scanner Pharmacy Ambulance Service Substance Abuse $3,880,000 300,000 395,000 150,000 300,000 $5,025,000 Emergency Service Medical and Surgical Supply Operating Rooms and Anesthesia Respiratory Therapy Physical Therapy EKG and EEG Home Health and Hospice Other Total $2,375,000 1,700,000 1,375,000 950,000 1,800,000 1,525,000 525,000 700,000 185,000 80,000 460,000 1,295,000 130,000 $13,100,000 General Services Dietary Maintenance Laundry Housekeeping Security Medical Records Total Support Services General Insurance Payroll Taxes Employee Welfare 5 Other Total Depreciation Amortization Interest Expense Provision for Doubtful Accounts $1,055,000 1,000,000 295,000 470,000 1752 50,000 $30,000 $3,200,000 $4,600,000 240,000 1,130,000 1,900,000 430,000 $8,300,000 1,900,000 50,000 325,000 1,500,000 Total Operating Expenses $33,400,000 Exhibit 33-8 Hospital Statistical Data Inpatient Indicators: Patient Days Medical and surgical Obstetrics Skilled nursing unit Admissions Adult acute care Newborn Skilled nursing unit Discharges Adult acute care Newborn Skilled nursing unit Average Length of Stay (in days) Finance Information Systems Support Ambulatory Nursing MRI Dialysis Oncology Metropolis Health System Schedule of Hospital Statistics for the Year Ended March 31, 2 Cardiac Rehab 13,650 1,080 4,500 Medical 3,610 $15 440 Surgical 3,580 315 445 Medical Surgical Emergency Nursing 4.1 Emergency Director of Nurses Departmental Volume Indicators: Respiratory therapy treatments Physical therapy treatments Laboratory workload units (in thousands) EKGs CT scans MRI scans Emergency room visits Ambulance trips Home health visits Women's Health OB/GYN Approximate number of employees (FTE) Health & Development Pediatric Nursing 51,480 Children's Medicine 34,060 Pediatric Medicine 2,750 8,900 2,780 910 11,820 2.399 14,950 TOX Education Recruitment Support 510 Exhibit 33-3 Statement of Cash Flows Metropolis Health System Statement of Cash Flows for the Year Ended March 31, 2 Statement of Cash Flows Operating Activities Income from operations Adjustments to reconcile income from operations to net cash flows from operating activities Depreciation and amortization Changes in asset and liability accounts Patient accounts receivable Other receivables Inventories Prepaid expenses and other assets Accounts payable and accrued expenses Reduction of bond interest payable Estimated third-party payer settlements Interest income received Unrestricted gifts and memorials received Net cash flow from operating activities Cash Flows from Capital and Related Financing Activities Repayment of long-term obligations Cash Flows from Investing Activities Purchase of assets whose use is limited Equipment purchases and building improvements Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year $1,700,000 1,950,000 250,000 (50,000) (50,000) (50,000) (400,000) (25,000) (75,000) 80,000 20,000 $3,350,000 (500,000) (100,000) (2,000,000) $750,000 400,000 $1,150,000 C. Financial Analytical Report (50 points) Please write an executive summary to Senior Vice President in Finance/CFO. You may use reasonable assumptions to build up your case. Here's the requirement of the report. 1. 1-inch margin, 1.5 spacing 2. Font size: Arial 12 3. Word count: 600-800 (approximately 2 pages) 4. Content: a. Provide an overview of the financial status of the organization b. Provide suggestions to the Senior Vice President to improve the financial status of the organization that can be considered in future strategic plan 5. Evaluation of the Report: a. Style and format (10 points) b. Correct numbers cited from the financial reports (10 points) c. Usage of the information from all financial reports provided (10 points) d. Logic structure of the report (10 points) e. Overall writing quality, including spelling check, grammar, and professional term usage (10 points) 1. The Hospital System Metropolis Health System (MHS) offers comprehensive healthcare services. It is a mid- size taxing district hospital. Although MHS has the power to raise revenues through taxes, it has not done so for the past seven years. 2. The Area MHS is located in the town of Metropolis, which has a population of 50,000. The town has a small college and a modest number of environmentally clean industries. 3. MHS Services MHS has taken significant steps to reduce hospital stays. It has developed a comprehen- sive array of services that are accessible, cost-effective, and responsive to the community's needs. These services are wellness oriented in that they strive for prevention rather than treatment. As a result of these steps, inpatient visits have increased overall by only 1,000 per year since 2010 whereas outpatient/same-day surgery visits have had an increase of over 50,000 per year. A number of programmatic, service, and facility enhancements support this major transi- tion in the community's institutional health care. They are geared to provide the quality. convenience, affordability, and personal care that best suit the health needs of the people whom MHS serves. Rehabilitation and Wellness Center-for outpatient physical therapy and return-to- work services, plus cardiac and pulmonary rehabilitation, to get people back to a nor- mal way of living. Home Health Services-bringing skilled care, therapy, and medical social services into the home; a comfortable and affordable alternative in longer-term care. Same-Day Surgery (SDS)-eliminating the need for an overnight stay. Since 2010 same-day surgery procedures have doubled at MHS. Skilled Nursing Facility-inpatient service to assist patients in returning more fully to an independent lifestyle. The medical staff's quality improvement program has begun a care path initiative to track effective means for diagnosis, treatment, and follow-up. This initiative will help avoid unnecessary or duplicate use of expensive medications or technologies. 9. MHS Foundation Metropolis Health Foundation is presently being created to serve as the philanthropic arm of MHS. It will operate in a separate corporation governed by a board of 12 com- munity leaders and supported by a 15-member special events board. The mission of the foundation will be to secure financial and nonfinancial support for realizing the MHS vision of providing comprehensive health care for the community. Funds donated by individuals, businesses, foundations, and organizations will be desig- nated for a variety of purposes at MHS, including the operation of specific departments, community outreach programs, continuing education for employees, endowment, equip- ment, and capital improvements. 10. MHS Volunteer Auxiliary There are 500 volunteers who provide over 60,000 hours of service to MHS each year. These men and women assist in virtually every part of the system's operations. They also conduct community programs on behalf of MHS. The auxiliary funds its programs and makes financial contributions to MHS through money it raises on renting televisions and vending gifts and other items at the hospital. In the past, its donations to MHS have generally been designated for medical equipment purchases. The auxiliary has given $250,000 over the last five years. 11. Planning the Future for MHS The MHS has identified five areas of desired service and programmatic enhancement in its five-year strategic plan: 1. Ambulatory Services II. Physical Medicine and Rehabilitative Services III. Cardiovascular Services IV. Oncology Services V. Community Health Services MHS has set out to answer the most critical health needs that are specific to its commu- nity. Over the next five years, the MHS strategic plan will continue a tradition of quality, community-oriented health care to meet future demands. 12. Financing the Future MHS has established a corporate depreciation fund. The fund's purpose is to ease the financial burden of replacing fixed assets. Presently, it has almost $2 million for needed equipment and renovations. BUDY Exhibit 33-1 Balance Sheet Assets Current Assets Cash and Cash Equivalents Assets Whose Use Is Limited Patient Accounts Receivable 7,400,000 (Net of $1,300,000 Allowance for Bad Debts) Other Receivables Inventories Prepaid Expenses Total Current Assets Assets Whose Use Is Limited Corporate Funded Depreciation Held by Trustee Under Bond Indenture Agreement Total Assets Whose Use Is Limited Less Current Portion Net Assets Whose Use Is Limited Property, Plant, and Equipment, Net Metropolis Health System Balance Sheet March 31, 2 Other Assets Total Assets $1,150,000 825,000 150,000 900,000 200,000 10,625,000 1,950,000 1,425,000 3,375,000 (825,000) 2,550,000 19,300,000 325,000 $32,800,000 Liabilities and Fund Balance Current Liabilities Current Maturities of Long-Term Debt Accounts Payable and Accrued Expenses Bond Interest Payable Reimbursement Settlement Payable Total Current Liabilities Long-Term Debt Less Current Portion of Long-Term Debt Net Long-Term Debt Total Liabilities Fund Balances General Fund Total Fund Balances Total Liabilities and Fund Balances $525,000 4,900,000 300,000 100,000 5,825,000 6,000,000 (525,000) 5,475,000 11,300,000 21,500,000 21,500,000 $32,800,000 Exhibit 33-2 Statement of Revenue and Expense Metropolis Health System Statement of Revenue and Expense for the Year Ended March 31, 2 Revenue Net patient service revenue Other revenue Total Operating Revenue Expenses Nursing services Other professional services General services Support services Depreciation Amortization Interest Provision for doubtful accounts Total Expenses Income from Operations Nonoperating Gains (Losses) Unrestricted gifts and memorials $34,000,000 1,100,000 $35,100,000 $5,025,000 13,100,000 3,200,000 8,300,000 1,900,000 50,000 325,000 1,500,000 $20,000 80,000 Interest income Nonoperating Gains, Net Revenue and Gains in Excess of Expenses and Losses $3,400,000 $1,700,000 100,000 $1,800,000 hibit 33-4 Statement of Changes in Fund Balance General Fund Balance April 1, 2 Revenue and Gains in Excess of Expenses and Losses General Fund Balance March 31, 2, Exhibit 33-5 Schedule of Property, Plant, and Equipment Metropolis Health System Statement of Changes in Fund Balance for the Year Ended March 31, 2 Equipment Buildings and Improvements Land Improvements Total Metropolis Health System Schedule of Property, Plant, and Equipment for the Year Ended March 31, 2 Land Less Accumulated Depreciation Net Depreciable Assets Construction in Progress Net Property, Plant, and Equipment $19,700,000 1,800,000 $21,500,000 $14,700,000 1,100,000 28,900,000 $44,700,000 (26,100,000) $18,600,000 480,000 220,000 $19,300,000 Exhibit 33-6 Schedule of Patient Revenue Metropolis Health System Schedule of Patient Revenue for the Year Ended March 31, 2 Patient Services Revenue Routine revenue Laboratory Radiology and CT scanner OB-nursery Pharmacy Emergency service Medical and surgical supply and IV Operating rooms Anesthesiology Respiratory therapy Physical therapy EKG and EEG Ambulance service Oxygen Home health and hospice Substance abuse Other Subtotal Less allowances and charity care Net Patient Service Revenue $9,850,000 7,375,000 5,825,000 450,000 3,175,000 2,200,000 5,050,000 5,250,000 1,600,000 900,000 1,475,000 1,050,000 900,000 575,000 1,675,000 375,000 775,000 $48,500,000 (14,500,000) $34,000,000 ir 33-7 Schedule of Operating Expenses Nursing Services Routine Medical/Surgical Operating Room Intensive Care Units OB-Nursery Other Tocal Metropolis Health System Schedule of Operating Expenses for the Year Ended March 31, 2 Other Professional Services Laboratory Radiology and CT Scanner Pharmacy Ambulance Service Substance Abuse $3,880,000 300,000 395,000 150,000 300,000 $5,025,000 Emergency Service Medical and Surgical Supply Operating Rooms and Anesthesia Respiratory Therapy Physical Therapy EKG and EEG Home Health and Hospice Other Total $2,375,000 1,700,000 1,375,000 950,000 1,800,000 1,525,000 525,000 700,000 185,000 80,000 460,000 1,295,000 130,000 $13,100,000 General Services Dietary Maintenance Laundry Housekeeping Security Medical Records Total Support Services General Insurance Payroll Taxes Employee Welfare 5 Other Total Depreciation Amortization Interest Expense Provision for Doubtful Accounts $1,055,000 1,000,000 295,000 470,000 1752 50,000 $30,000 $3,200,000 $4,600,000 240,000 1,130,000 1,900,000 430,000 $8,300,000 1,900,000 50,000 325,000 1,500,000 Total Operating Expenses $33,400,000 Exhibit 33-8 Hospital Statistical Data Inpatient Indicators: Patient Days Medical and surgical Obstetrics Skilled nursing unit Admissions Adult acute care Newborn Skilled nursing unit Discharges Adult acute care Newborn Skilled nursing unit Average Length of Stay (in days) Finance Information Systems Support Ambulatory Nursing MRI Dialysis Oncology Metropolis Health System Schedule of Hospital Statistics for the Year Ended March 31, 2 Cardiac Rehab 13,650 1,080 4,500 Medical 3,610 $15 440 Surgical 3,580 315 445 Medical Surgical Emergency Nursing 4.1 Emergency Director of Nurses Departmental Volume Indicators: Respiratory therapy treatments Physical therapy treatments Laboratory workload units (in thousands) EKGs CT scans MRI scans Emergency room visits Ambulance trips Home health visits Women's Health OB/GYN Approximate number of employees (FTE) Health & Development Pediatric Nursing 51,480 Children's Medicine 34,060 Pediatric Medicine 2,750 8,900 2,780 910 11,820 2.399 14,950 TOX Education Recruitment Support 510 Exhibit 33-3 Statement of Cash Flows Metropolis Health System Statement of Cash Flows for the Year Ended March 31, 2 Statement of Cash Flows Operating Activities Income from operations Adjustments to reconcile income from operations to net cash flows from operating activities Depreciation and amortization Changes in asset and liability accounts Patient accounts receivable Other receivables Inventories Prepaid expenses and other assets Accounts payable and accrued expenses Reduction of bond interest payable Estimated third-party payer settlements Interest income received Unrestricted gifts and memorials received Net cash flow from operating activities Cash Flows from Capital and Related Financing Activities Repayment of long-term obligations Cash Flows from Investing Activities Purchase of assets whose use is limited Equipment purchases and building improvements Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year $1,700,000 1,950,000 250,000 (50,000) (50,000) (50,000) (400,000) (25,000) (75,000) 80,000 20,000 $3,350,000 (500,000) (100,000) (2,000,000) $750,000 400,000 $1,150,000 C. Financial Analytical Report (50 points) Please write an executive summary to Senior Vice President in Finance/CFO. You may use reasonable assumptions to build up your case. Here's the requirement of the report. 1. 1-inch margin, 1.5 spacing 2. Font size: Arial 12 3. Word count: 600-800 (approximately 2 pages) 4. Content: a. Provide an overview of the financial status of the organization b. Provide suggestions to the Senior Vice President to improve the financial status of the organization that can be considered in future strategic plan 5. Evaluation of the Report: a. Style and format (10 points) b. Correct numbers cited from the financial reports (10 points) c. Usage of the information from all financial reports provided (10 points) d. Logic structure of the report (10 points) e. Overall writing quality, including spelling check, grammar, and professional term usage (10 points) 1. The Hospital System Metropolis Health System (MHS) offers comprehensive healthcare services. It is a mid- size taxing district hospital. Although MHS has the power to raise revenues through taxes, it has not done so for the past seven years. 2. The Area MHS is located in the town of Metropolis, which has a population of 50,000. The town has a small college and a modest number of environmentally clean industries. 3. MHS Services MHS has taken significant steps to reduce hospital stays. It has developed a comprehen- sive array of services that are accessible, cost-effective, and responsive to the community's needs. These services are wellness oriented in that they strive for prevention rather than treatment. As a result of these steps, inpatient visits have increased overall by only 1,000 per year since 2010 whereas outpatient/same-day surgery visits have had an increase of over 50,000 per year. A number of programmatic, service, and facility enhancements support this major transi- tion in the community's institutional health care. They are geared to provide the quality. convenience, affordability, and personal care that best suit the health needs of the people whom MHS serves. Rehabilitation and Wellness Center-for outpatient physical therapy and return-to- work services, plus cardiac and pulmonary rehabilitation, to get people back to a nor- mal way of living. Home Health Services-bringing skilled care, therapy, and medical social services into the home; a comfortable and affordable alternative in longer-term care. Same-Day Surgery (SDS)-eliminating the need for an overnight stay. Since 2010 same-day surgery procedures have doubled at MHS. Skilled Nursing Facility-inpatient service to assist patients in returning more fully to an independent lifestyle. The medical staff's quality improvement program has begun a care path initiative to track effective means for diagnosis, treatment, and follow-up. This initiative will help avoid unnecessary or duplicate use of expensive medications or technologies. 9. MHS Foundation Metropolis Health Foundation is presently being created to serve as the philanthropic arm of MHS. It will operate in a separate corporation governed by a board of 12 com- munity leaders and supported by a 15-member special events board. The mission of the foundation will be to secure financial and nonfinancial support for realizing the MHS vision of providing comprehensive health care for the community. Funds donated by individuals, businesses, foundations, and organizations will be desig- nated for a variety of purposes at MHS, including the operation of specific departments, community outreach programs, continuing education for employees, endowment, equip- ment, and capital improvements. 10. MHS Volunteer Auxiliary There are 500 volunteers who provide over 60,000 hours of service to MHS each year. These men and women assist in virtually every part of the system's operations. They also conduct community programs on behalf of MHS. The auxiliary funds its programs and makes financial contributions to MHS through money it raises on renting televisions and vending gifts and other items at the hospital. In the past, its donations to MHS have generally been designated for medical equipment purchases. The auxiliary has given $250,000 over the last five years. 11. Planning the Future for MHS The MHS has identified five areas of desired service and programmatic enhancement in its five-year strategic plan: 1. Ambulatory Services II. Physical Medicine and Rehabilitative Services III. Cardiovascular Services IV. Oncology Services V. Community Health Services MHS has set out to answer the most critical health needs that are specific to its commu- nity. Over the next five years, the MHS strategic plan will continue a tradition of quality, community-oriented health care to meet future demands. 12. Financing the Future MHS has established a corporate depreciation fund. The fund's purpose is to ease the financial burden of replacing fixed assets. Presently, it has almost $2 million for needed equipment and renovations. BUDY Exhibit 33-1 Balance Sheet Assets Current Assets Cash and Cash Equivalents Assets Whose Use Is Limited Patient Accounts Receivable 7,400,000 (Net of $1,300,000 Allowance for Bad Debts) Other Receivables Inventories Prepaid Expenses Total Current Assets Assets Whose Use Is Limited Corporate Funded Depreciation Held by Trustee Under Bond Indenture Agreement Total Assets Whose Use Is Limited Less Current Portion Net Assets Whose Use Is Limited Property, Plant, and Equipment, Net Metropolis Health System Balance Sheet March 31, 2 Other Assets Total Assets $1,150,000 825,000 150,000 900,000 200,000 10,625,000 1,950,000 1,425,000 3,375,000 (825,000) 2,550,000 19,300,000 325,000 $32,800,000 Liabilities and Fund Balance Current Liabilities Current Maturities of Long-Term Debt Accounts Payable and Accrued Expenses Bond Interest Payable Reimbursement Settlement Payable Total Current Liabilities Long-Term Debt Less Current Portion of Long-Term Debt Net Long-Term Debt Total Liabilities Fund Balances General Fund Total Fund Balances Total Liabilities and Fund Balances $525,000 4,900,000 300,000 100,000 5,825,000 6,000,000 (525,000) 5,475,000 11,300,000 21,500,000 21,500,000 $32,800,000 Exhibit 33-2 Statement of Revenue and Expense Metropolis Health System Statement of Revenue and Expense for the Year Ended March 31, 2 Revenue Net patient service revenue Other revenue Total Operating Revenue Expenses Nursing services Other professional services General services Support services Depreciation Amortization Interest Provision for doubtful accounts Total Expenses Income from Operations Nonoperating Gains (Losses) Unrestricted gifts and memorials $34,000,000 1,100,000 $35,100,000 $5,025,000 13,100,000 3,200,000 8,300,000 1,900,000 50,000 325,000 1,500,000 $20,000 80,000 Interest income Nonoperating Gains, Net Revenue and Gains in Excess of Expenses and Losses $3,400,000 $1,700,000 100,000 $1,800,000 hibit 33-4 Statement of Changes in Fund Balance General Fund Balance April 1, 2 Revenue and Gains in Excess of Expenses and Losses General Fund Balance March 31, 2, Exhibit 33-5 Schedule of Property, Plant, and Equipment Metropolis Health System Statement of Changes in Fund Balance for the Year Ended March 31, 2 Equipment Buildings and Improvements Land Improvements Total Metropolis Health System Schedule of Property, Plant, and Equipment for the Year Ended March 31, 2 Land Less Accumulated Depreciation Net Depreciable Assets Construction in Progress Net Property, Plant, and Equipment $19,700,000 1,800,000 $21,500,000 $14,700,000 1,100,000 28,900,000 $44,700,000 (26,100,000) $18,600,000 480,000 220,000 $19,300,000 Exhibit 33-6 Schedule of Patient Revenue Metropolis Health System Schedule of Patient Revenue for the Year Ended March 31, 2 Patient Services Revenue Routine revenue Laboratory Radiology and CT scanner OB-nursery Pharmacy Emergency service Medical and surgical supply and IV Operating rooms Anesthesiology Respiratory therapy Physical therapy EKG and EEG Ambulance service Oxygen Home health and hospice Substance abuse Other Subtotal Less allowances and charity care Net Patient Service Revenue $9,850,000 7,375,000 5,825,000 450,000 3,175,000 2,200,000 5,050,000 5,250,000 1,600,000 900,000 1,475,000 1,050,000 900,000 575,000 1,675,000 375,000 775,000 $48,500,000 (14,500,000) $34,000,000 ir 33-7 Schedule of Operating Expenses Nursing Services Routine Medical/Surgical Operating Room Intensive Care Units OB-Nursery Other Tocal Metropolis Health System Schedule of Operating Expenses for the Year Ended March 31, 2 Other Professional Services Laboratory Radiology and CT Scanner Pharmacy Ambulance Service Substance Abuse $3,880,000 300,000 395,000 150,000 300,000 $5,025,000 Emergency Service Medical and Surgical Supply Operating Rooms and Anesthesia Respiratory Therapy Physical Therapy EKG and EEG Home Health and Hospice Other Total $2,375,000 1,700,000 1,375,000 950,000 1,800,000 1,525,000 525,000 700,000 185,000 80,000 460,000 1,295,000 130,000 $13,100,000 General Services Dietary Maintenance Laundry Housekeeping Security Medical Records Total Support Services General Insurance Payroll Taxes Employee Welfare 5 Other Total Depreciation Amortization Interest Expense Provision for Doubtful Accounts $1,055,000 1,000,000 295,000 470,000 1752 50,000 $30,000 $3,200,000 $4,600,000 240,000 1,130,000 1,900,000 430,000 $8,300,000 1,900,000 50,000 325,000 1,500,000 Total Operating Expenses $33,400,000 Exhibit 33-8 Hospital Statistical Data Inpatient Indicators: Patient Days Medical and surgical Obstetrics Skilled nursing unit Admissions Adult acute care Newborn Skilled nursing unit Discharges Adult acute care Newborn Skilled nursing unit Average Length of Stay (in days) Finance Information Systems Support Ambulatory Nursing MRI Dialysis Oncology Metropolis Health System Schedule of Hospital Statistics for the Year Ended March 31, 2 Cardiac Rehab 13,650 1,080 4,500 Medical 3,610 $15 440 Surgical 3,580 315 445 Medical Surgical Emergency Nursing 4.1 Emergency Director of Nurses Departmental Volume Indicators: Respiratory therapy treatments Physical therapy treatments Laboratory workload units (in thousands) EKGs CT scans MRI scans Emergency room visits Ambulance trips Home health visits Women's Health OB/GYN Approximate number of employees (FTE) Health & Development Pediatric Nursing 51,480 Children's Medicine 34,060 Pediatric Medicine 2,750 8,900 2,780 910 11,820 2.399 14,950 TOX Education Recruitment Support 510 Exhibit 33-3 Statement of Cash Flows Metropolis Health System Statement of Cash Flows for the Year Ended March 31, 2 Statement of Cash Flows Operating Activities Income from operations Adjustments to reconcile income from operations to net cash flows from operating activities Depreciation and amortization Changes in asset and liability accounts Patient accounts receivable Other receivables Inventories Prepaid expenses and other assets Accounts payable and accrued expenses Reduction of bond interest payable Estimated third-party payer settlements Interest income received Unrestricted gifts and memorials received Net cash flow from operating activities Cash Flows from Capital and Related Financing Activities Repayment of long-term obligations Cash Flows from Investing Activities Purchase of assets whose use is limited Equipment purchases and building improvements Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year $1,700,000 1,950,000 250,000 (50,000) (50,000) (50,000) (400,000) (25,000) (75,000) 80,000 20,000 $3,350,000 (500,000) (100,000) (2,000,000) $750,000 400,000 $1,150,000 C. Financial Analytical Report (50 points) Please write an executive summary to Senior Vice President in Finance/CFO. You may use reasonable assumptions to build up your case. Here's the requirement of the report. 1. 1-inch margin, 1.5 spacing 2. Font size: Arial 12 3. Word count: 600-800 (approximately 2 pages) 4. Content: a. Provide an overview of the financial status of the organization b. Provide suggestions to the Senior Vice President to improve the financial status of the organization that can be considered in future strategic plan 5. Evaluation of the Report: a. Style and format (10 points) b. Correct numbers cited from the financial reports (10 points) c. Usage of the information from all financial reports provided (10 points) d. Logic structure of the report (10 points) e. Overall writing quality, including spelling check, grammar, and professional term usage (10 points) 1. The Hospital System Metropolis Health System (MHS) offers comprehensive healthcare services. It is a mid- size taxing district hospital. Although MHS has the power to raise revenues through taxes, it has not done so for the past seven years. 2. The Area MHS is located in the town of Metropolis, which has a population of 50,000. The town has a small college and a modest number of environmentally clean industries. 3. MHS Services MHS has taken significant steps to reduce hospital stays. It has developed a comprehen- sive array of services that are accessible, cost-effective, and responsive to the community's needs. These services are wellness oriented in that they strive for prevention rather than treatment. As a result of these steps, inpatient visits have increased overall by only 1,000 per year since 2010 whereas outpatient/same-day surgery visits have had an increase of over 50,000 per year. A number of programmatic, service, and facility enhancements support this major transi- tion in the community's institutional health care. They are geared to provide the quality. convenience, affordability, and personal care that best suit the health needs of the people whom MHS serves. Rehabilitation and Wellness Center-for outpatient physical therapy and return-to- work services, plus cardiac and pulmonary rehabilitation, to get people back to a nor- mal way of living. Home Health Services-bringing skilled care, therapy, and medical social services into the home; a comfortable and affordable alternative in longer-term care. Same-Day Surgery (SDS)-eliminating the need for an overnight stay. Since 2010 same-day surgery procedures have doubled at MHS. Skilled Nursing Facility-inpatient service to assist patients in returning more fully to an independent lifestyle. The medical staff's quality improvement program has begun a care path initiative to track effective means for diagnosis, treatment, and follow-up. This initiative will help avoid unnecessary or duplicate use of expensive medications or technologies. 9. MHS Foundation Metropolis Health Foundation is presently being created to serve as the philanthropic arm of MHS. It will operate in a separate corporation governed by a board of 12 com- munity leaders and supported by a 15-member special events board. The mission of the foundation will be to secure financial and nonfinancial support for realizing the MHS vision of providing comprehensive health care for the community. Funds donated by individuals, businesses, foundations, and organizations will be desig- nated for a variety of purposes at MHS, including the operation of specific departments, community outreach programs, continuing education for employees, endowment, equip- ment, and capital improvements. 10. MHS Volunteer Auxiliary There are 500 volunteers who provide over 60,000 hours of service to MHS each year. These men and women assist in virtually every part of the system's operations. They also conduct community programs on behalf of MHS. The auxiliary funds its programs and makes financial contributions to MHS through money it raises on renting televisions and vending gifts and other items at the hospital. In the past, its donations to MHS have generally been designated for medical equipment purchases. The auxiliary has given $250,000 over the last five years. 11. Planning the Future for MHS The MHS has identified five areas of desired service and programmatic enhancement in its five-year strategic plan: 1. Ambulatory Services II. Physical Medicine and Rehabilitative Services III. Cardiovascular Services IV. Oncology Services V. Community Health Services MHS has set out to answer the most critical health needs that are specific to its commu- nity. Over the next five years, the MHS strategic plan will continue a tradition of quality, community-oriented health care to meet future demands. 12. Financing the Future MHS has established a corporate depreciation fund. The fund's purpose is to ease the financial burden of replacing fixed assets. Presently, it has almost $2 million for needed equipment and renovations. BUDY Exhibit 33-1 Balance Sheet Assets Current Assets Cash and Cash Equivalents Assets Whose Use Is Limited Patient Accounts Receivable 7,400,000 (Net of $1,300,000 Allowance for Bad Debts) Other Receivables Inventories Prepaid Expenses Total Current Assets Assets Whose Use Is Limited Corporate Funded Depreciation Held by Trustee Under Bond Indenture Agreement Total Assets Whose Use Is Limited Less Current Portion Net Assets Whose Use Is Limited Property, Plant, and Equipment, Net Metropolis Health System Balance Sheet March 31, 2 Other Assets Total Assets $1,150,000 825,000 150,000 900,000 200,000 10,625,000 1,950,000 1,425,000 3,375,000 (825,000) 2,550,000 19,300,000 325,000 $32,800,000 Liabilities and Fund Balance Current Liabilities Current Maturities of Long-Term Debt Accounts Payable and Accrued Expenses Bond Interest Payable Reimbursement Settlement Payable Total Current Liabilities Long-Term Debt Less Current Portion of Long-Term Debt Net Long-Term Debt Total Liabilities Fund Balances General Fund Total Fund Balances Total Liabilities and Fund Balances $525,000 4,900,000 300,000 100,000 5,825,000 6,000,000 (525,000) 5,475,000 11,300,000 21,500,000 21,500,000 $32,800,000 Exhibit 33-2 Statement of Revenue and Expense Metropolis Health System Statement of Revenue and Expense for the Year Ended March 31, 2 Revenue Net patient service revenue Other revenue Total Operating Revenue Expenses Nursing services Other professional services General services Support services Depreciation Amortization Interest Provision for doubtful accounts Total Expenses Income from Operations Nonoperating Gains (Losses) Unrestricted gifts and memorials $34,000,000 1,100,000 $35,100,000 $5,025,000 13,100,000 3,200,000 8,300,000 1,900,000 50,000 325,000 1,500,000 $20,000 80,000 Interest income Nonoperating Gains, Net Revenue and Gains in Excess of Expenses and Losses $3,400,000 $1,700,000 100,000 $1,800,000 hibit 33-4 Statement of Changes in Fund Balance General Fund Balance April 1, 2 Revenue and Gains in Excess of Expenses and Losses General Fund Balance March 31, 2, Exhibit 33-5 Schedule of Property, Plant, and Equipment Metropolis Health System Statement of Changes in Fund Balance for the Year Ended March 31, 2 Equipment Buildings and Improvements Land Improvements Total Metropolis Health System Schedule of Property, Plant, and Equipment for the Year Ended March 31, 2 Land Less Accumulated Depreciation Net Depreciable Assets Construction in Progress Net Property, Plant, and Equipment $19,700,000 1,800,000 $21,500,000 $14,700,000 1,100,000 28,900,000 $44,700,000 (26,100,000) $18,600,000 480,000 220,000 $19,300,000 Exhibit 33-6 Schedule of Patient Revenue Metropolis Health System Schedule of Patient Revenue for the Year Ended March 31, 2 Patient Services Revenue Routine revenue Laboratory Radiology and CT scanner OB-nursery Pharmacy Emergency service Medical and surgical supply and IV Operating rooms Anesthesiology Respiratory therapy Physical therapy EKG and EEG Ambulance service Oxygen Home health and hospice Substance abuse Other Subtotal Less allowances and charity care Net Patient Service Revenue $9,850,000 7,375,000 5,825,000 450,000 3,175,000 2,200,000 5,050,000 5,250,000 1,600,000 900,000 1,475,000 1,050,000 900,000 575,000 1,675,000 375,000 775,000 $48,500,000 (14,500,000) $34,000,000 ir 33-7 Schedule of Operating Expenses Nursing Services Routine Medical/Surgical Operating Room Intensive Care Units OB-Nursery Other Tocal Metropolis Health System Schedule of Operating Expenses for the Year Ended March 31, 2 Other Professional Services Laboratory Radiology and CT Scanner Pharmacy Ambulance Service Substance Abuse $3,880,000 300,000 395,000 150,000 300,000 $5,025,000 Emergency Service Medical and Surgical Supply Operating Rooms and Anesthesia Respiratory Therapy Physical Therapy EKG and EEG Home Health and Hospice Other Total $2,375,000 1,700,000 1,375,000 950,000 1,800,000 1,525,000 525,000 700,000 185,000 80,000 460,000 1,295,000 130,000 $13,100,000 General Services Dietary Maintenance Laundry Housekeeping Security Medical Records Total Support Services General Insurance Payroll Taxes Employee Welfare 5 Other Total Depreciation Amortization Interest Expense Provision for Doubtful Accounts $1,055,000 1,000,000 295,000 470,000 1752 50,000 $30,000 $3,200,000 $4,600,000 240,000 1,130,000 1,900,000 430,000 $8,300,000 1,900,000 50,000 325,000 1,500,000 Total Operating Expenses $33,400,000 Exhibit 33-8 Hospital Statistical Data Inpatient Indicators: Patient Days Medical and surgical Obstetrics Skilled nursing unit Admissions Adult acute care Newborn Skilled nursing unit Discharges Adult acute care Newborn Skilled nursing unit Average Length of Stay (in days) Finance Information Systems Support Ambulatory Nursing MRI Dialysis Oncology Metropolis Health System Schedule of Hospital Statistics for the Year Ended March 31, 2 Cardiac Rehab 13,650 1,080 4,500 Medical 3,610 $15 440 Surgical 3,580 315 445 Medical Surgical Emergency Nursing 4.1 Emergency Director of Nurses Departmental Volume Indicators: Respiratory therapy treatments Physical therapy treatments Laboratory workload units (in thousands) EKGs CT scans MRI scans Emergency room visits Ambulance trips Home health visits Women's Health OB/GYN Approximate number of employees (FTE) Health & Development Pediatric Nursing 51,480 Children's Medicine 34,060 Pediatric Medicine 2,750 8,900 2,780 910 11,820 2.399 14,950 TOX Education Recruitment Support 510 Exhibit 33-3 Statement of Cash Flows Metropolis Health System Statement of Cash Flows for the Year Ended March 31, 2 Statement of Cash Flows Operating Activities Income from operations Adjustments to reconcile income from operations to net cash flows from operating activities Depreciation and amortization Changes in asset and liability accounts Patient accounts receivable Other receivables Inventories Prepaid expenses and other assets Accounts payable and accrued expenses Reduction of bond interest payable Estimated third-party payer settlements Interest income received Unrestricted gifts and memorials received Net cash flow from operating activities Cash Flows from Capital and Related Financing Activities Repayment of long-term obligations Cash Flows from Investing Activities Purchase of assets whose use is limited Equipment purchases and building improvements Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year $1,700,000 1,950,000 250,000 (50,000) (50,000) (50,000) (400,000) (25,000) (75,000) 80,000 20,000 $3,350,000 (500,000) (100,000) (2,000,000) $750,000 400,000 $1,150,000 C. Financial Analytical Report (50 points) Please write an executive summary to Senior Vice President in Finance/CFO. You may use reasonable assumptions to build up your case. Here's the requirement of the report. 1. 1-inch margin, 1.5 spacing 2. Font size: Arial 12 3. Word count: 600-800 (approximately 2 pages) 4. Content: a. Provide an overview of the financial status of the organization b. Provide suggestions to the Senior Vice President to improve the financial status of the organization that can be considered in future strategic plan 5. Evaluation of the Report: a. Style and format (10 points) b. Correct numbers cited from the financial reports (10 points) c. Usage of the information from all financial reports provided (10 points) d. Logic structure of the report (10 points) e. Overall writing quality, including spelling check, grammar, and professional term usage (10 points)