Pearland Medical Center reported revenues of $1,500,000,000 in 2012 and $1,250,000,000 in 2013. The revenue streams comprised 25% patient self-pay revenue, 50% third-party payors revenue, and the remaining 25% was a combination of grants from the Grant Foundation and investments. The medical center spent $15,000,000 in marketing for each of the past two years. The average hospital daily patient census was 570 in 2012 and 470 patients in 2013; patient hospital days were 202,920 in 2012 and 171,500 in 2013.
Pearland Medical Center reported operating expenses of $500,000,000 in 2012; but due to layoffs and reorganization, operating expenses decreased by $200,000,000 in 2013. Depreciation expense was $50,000,000 in both years. The medical center spent $20,000,000 on research and education each year. Executive administration anticipates little growth in patient population in the coming year and will likely need to invest in new equipment. The nonprofit facility pays no shareholder dividends or taxes.
- Create an income statement based on the scenario. Determine the financial health of Pearland Medical Center. What were Pearland Medical Center’s net income, cash flow, total profit margin, and total profit margin excluding grants and investments for each year?
- Discuss your suggestions for Pearland Medical Center based on your interpretation of the income statement. Is the facility financially healthy? Should the Grant Foundation reconsider their grant?
Length: 3-4 pages, excluding title page and references.
Assessment and Grading: Your paper will be assessed based on the performance assessment rubric that is linked within the course. Review it before you begin working on the assignment.
Your submission should meet the guidelines on file format, in-text citations and references, scholarly sources, scholarly writing, and use of direct quotes noted under Module 1 Assignment Expectations.