Hospitals
Financial
statements
Hospitals
also issue
Financial
Statements
like all
other business
organizations.
These statements
give an
account
of the type
of financial
actions
of the Hospital
i.e. how
much revenue
was generated,
the amount
spent and
surplus
left. The
financial
statements
give a complete
picture
of the Hospital’s
financial
health and
also evaluate
its performance
during a
given period
of years.
An
independent
auditing
firm prepares
the Audited
Financial
Statements,
based upon
generally
accepted
accounting
and auditing
principles.
An Audit
includes
examining
on a test
basis, evidence
supporting
the amounts
and disclosing
in financial
statements
assessing
the accounting
principles
used and
significant
estimates
made by
management.
The Financial
Statements
of the Hospital
include
1)
Comparitive
Statement
of Operations:
The comparative
Statement
of Operations
evaluates
performance
of the Hospital
over a designated
period of
time usually
a year.
It provides
all the
important
information
on profitability
and performance
of the Hospital
including
the Hospital
Profit and
Hospital
Profit is
evaluated
as
Operating
Revenues–
Operating
Expenses
= Operating
Income
Operating
Income +/-
Non-Operating
Gain/Loss
= Total
(Surplus/Deficit)
2)
Balance
Sheet:
The Balance
Sheet gives
an overview
of an organization’s
financial
health at
a particular
period of
time. The
major aspects
covered
by Balance
Sheet are:
a)
Assets:
Assets are
the economic
resources
which provide
future benefits
by helping
raise
Funds
or reduce
Expenditures.
Property
plant and
equipment
(PPE) are
known to
be as Assets.
b)
Liabilities:
Liabilities
are economic
obligations
of the organization
to outsiders
or claims
against
its assets.
c)
Net Assets:
They are
the remaining
assets of
the organizations
total assets
left after
deducting
all liabilities.
d)
Balance
Sheet Equation:
The Balance
Sheet consists
of two sections,
counter
balancing
each other
forcing
the sheet
equation:
Asset
= Liabilities
+ Equity
(or Net
Assets)
3)
Cash Flow
Statement:
The Cash
Flow Statement
is a record
of the cash
that has
come into
and gone
out of an
organization,
after operating
expenses
have been
met during
the accounting
period.
This analysis
of the Cash
Flowing
in provides
us a reliable
and valuable
perspective
of the hospital’s
performance
on the financial
front. The
standard
areas covered
in this
statement
are
»Cash
from Operating
Activities
»
Net Income
»Non-cash
Expenses
(Depreciation
and Amortization)
»
Working
Capital
Charges
»Total
Cash from
Operating
Activities
»Cash
used for
Investing
Activities
»
Property
Plant and
Equipment
Purchases
»Increases
or Decreases
in Market
Place Securities
»
Cash from
Financing
Activities
»
Issuance
or Repayment
of Long
Term debt
»
Transfers
to and from
affiliates
(exchange/transfer
of funds
between
Hospitals
affiliated
to other
entities)
4)
Footnotes:
Important
points such
as indicators
used to
measure
charitable
commitments,
descriptions
of changes
in accounting
principles
and affiliate
name and
transfers
etc are
discussed
in the footnotes
attached
with the
other financial
statements.
Normally
people are
often unaware
of the enormous
challenges
that threaten
the very
existence
of Urban
Hospitals.
Lack of
knowledge
of Healthcare
Financing
and Operations
can hinder
people in
recognizing
of hospitals
for what
they truly
are – Community
Assets.
Even a basic
understanding
of Hospital
Finance
can help
people understand
and assess
the combination
of the actual
business
dynamics
along with
the latest
trends of
the Hospital
Industry.
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