Reference no: EM131286038

The analysis has to be done for 5 years of balance sheet from 2010 to 2015

Below is a link to the Washington Department of Health Data for hospitals:

https://www.doh.wa.gov/DataandStatisticalReports/HealthcareinWashington/HospitalandPatientData/HospitalFinancialDat/YearEndReports

You should note that FASB accounting changes have moved the line item "Provision for Bad Debt" from an expense to deduction from revenue.

This means you will have to adjust your spreadsheets in order for them to line up correctly. Please also note that since the DOH does not include a Statement of Cash Flows, you will need to estimate cash flow from the income statement as EBITDA.

Further, it may be difficult to obtain data on the operating income line item, so you may need to collect additional data from the health systems you are analyzing.

Finally, when choosing your hospitals, please remember that you should check to make certain there is 5 years of data rather than something less than that.

You will select one of the following 2 options:

OPTION A:

1. Select 3-4 hospitals of similar size in the state of Washington and collect data from the WA DOH website. (Does not have to be 3 different ownership types)

2. Choose 3 of the 4 financial condition analysis components presented below.

3. Choose 3 of the 5 operating indicator analysis components presented below.

4. Conduct a trend analysis [horizontal analysis] on several key line items

5. Use the DuPont analysis model to assess the 3 hospitals' financial condition

6.
Note: Groups of 1-3 will select 3 hospitals, while groups of 4 will select 4 hospitals.

OPTION B:
1. Select 2-3 hospitals (outside of the state of WA)
2. Choose 2 of the 4 financial condition analysis components presented below.
3. Choose 2 of the 5 operating indicator analysis components presented below.
4. Use the DuPont analysis model to assess the 2 hospitals' financial condition
5. Use the Hospital Compare data to assess the impact of their VBP incentive payments on their level of patient revenues
Note: Groups of 1-3 will select 2 hospitals, while groups of 4 will select 3 hospitals.

Please submit the following by noon Monday, Nov 14th:

[1] Specify if you are working alone or who you would like to work with as a group
[2] Specify if you will be doing Option A or B (which hospitals)
[3] Specify your choice of relevant financial and operating indicators

Approval by the course TA of groups, hospital selections will be on a first come, first serve basis.

All documents related to the Final Paper are due in Week 14. Turn It In has been integrated within Blackboard. Upon submission of your documents, an originality report is automatically generated. An originality report over 20% is too high and your paper will not be accepted. Please note that only the Word Document and presentation will be graded. This means that while calculations will be performed in the Excel workbook. The Word document and presentation will be the documents the instructor will review and grade. Papers should be limited to three pages single spaced (inserted exhibits will not count towards page length) in length and should include at least three primary references citied in your paper (other than your Gapenski text). Your completed Final Paper and the excel document should be posted to Blackboard by noon on Tuesday November 29th. The PowerPoint will be due by noon on Monday December 5th. One Word document, one Excel workbook, and one PowerPoint presentation are the minimum items required for the Final Paper assignment. Please submit any working papers or PDF copies of your workbooks as needed.

Academic Integrity: It is expected that you work on your own within your group and not use final paper material from current or past students; anyone determined to be in violation of this regulation shall be processed in accordance with the Academic Integrity Policy, as described in the Student Handbook from the WSU Office of Student Affairs [please see course syllabus for more details].

Scope of Work and Required Headers to your Final Paper: Here is the detailed outline of the 7 subject headings (in bold) that you should include in your paper.

1. Organizational Background is to provide information about the size, ownership type, age, and type of healthcare organization.

2. Problem statement about the management accounting problem as you see it including information about the organization(s) involved and what type of difficulty that they have faced in the financial statement that you have analyzed. Be explicit about the specific problem and begin this statement with: "the problem examined here is...".

3. Application of Tools provides documentation about the tools that you have chosen and consider a "what if" analysis on the impact of specific hospital characteristics on performance results using the data from the Department of Health or Hospital Compare website for the relevant years of complete data if performing a trend analysis or the most recent year of data if performing a DuPont analysis.

4. Findings includes a summary of your findings from the analysis reported in bullet fashion so that the reader can quickly understand the results

5. Discussion includes an interpretation at a level of detail in the financial and operational analysis that can allow you to explain why and how you arrived at the findings.

6. Recommendations include what you would say to management based on your findings from the analysis. Explain whether you feel the organization is capable of implementing the recommendation and why you believe this to be feasible. Includes supporting references form the literature in your recommendations.

7. Takeaways include all the lessons learned from the application of financial analysis tools and techniques in this analysis.

Financial Condition Analysis Components:
1. Profitability Ratios
a. Total Margin
b. Operating Margin
c. Return on Assets
d. Return on Equity

2. Liquidity Ratios
a. Current Ratio
b. Days Cash on Hand

3. Debt Management Ratios
a. Debt Ratio
b. Equity Ratio
c. Debt-to-Capitalization Ratio
d. Times Interest Earned (TIE) Ratio
e. Cash Flow Coverage
Use Current Maturities of Long term debt for "Debt Principal" - Found under Finance Statement on DOH Web site

4. Asset Management Ratios
a. Fixed Asset Turnover
b. Total Asset Turnover
c. Days in Patient Accounts Receivable
d. Average Age of Plant

Operating Indicator Analysis Components: (see pp 660-664)

1. Net price per Admission - *use net patient service revenue from income statement. Not the information sheet from DOH excel documents
2. Medicare/Medicaid Payment Percentage
3. Outpatient Revenue Percentage
4. Occupancy
5. Average Length of stay

For Option B Only:

VBP Analysis Component (see VBP Readings by Shoemaker and Klein posted to "Final Paper" folder on Blackboard )

- Groups will need to find each of their hospital's Provider ID numbers. These numbers are used by CMS to identify individual hospitals. The ID numbers can be found at:
https://data.medicare.gov/Hospital-Compare/Hospital-General-Information/xubh-q36u
- Each hospital has a total performance score for how well they are meeting the goals set out by CMS. The scores can be found here: https://www.medicare.gov/hospitalcompare/data/totalperformance-scores.html
- Adjustment factors show to what level CMS will adjust revenues. Adjustment factor for hospitals can be found at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-AssessmentInstruments/hospital-value-based-purchasing/index.html?redirect=/hospital-value-basedpurchasing/
- Apply the adjustment factor to the Medicare inpatient revenue to calculate a revised or adjusted revenue amount
- Operating income impact should also be assessed after VBP revenue adjustments.

Groups should consider this data when envisioning how VBP will impact the short-term profitability of each hospital. Scenarios should include impact to several financial indicators. One example is how an increase/decrease in revenue will impact the operating income and related operating margin ratios of each hospital.

For the financial conditions i have to do 1,2,3 i.e

1. Profitability Ratios(Total Margin, Operating Margin, Return on Assets, Return on Equity)

2. Liquidity Ratios (Current Ratio, Days Cash on Hand)

3. Debt Management Ratios(Debt Ratio ,Equity Ratio, Debt-to-Capitalization Ratio ,Times Interest Earned (TIE) Ratio ,Cash Flow Coverage )

For the Operating Indicator Analysis Components: 2,3,5 i.e

1. Medicare/Medicaid Payment Percentage
2. Outpatient Revenue Percentage
3. Average Length of stay

REQUIRMENTS:

1. Needs simplified version of balance sheets of all 5 years in one excel spread sheet

2. Analysis to be done for each year and the comparison should be done for all five years

3. Financial condition analysis and operational analysis should be shown on the excel spread sheet

4. Paper should be written in the format mentioned In the project specification, example of the final paper is attached

5. Recommendations should not be exactly similar to the example paper

The analysis has to be done for 5 years of balance sheet from 2010 to 2015

Attachment:- balance sheet.rar