Perform trend analysis on the MHS statement of revenue and expenses. APPENDIX 28
ID: 2654461 • Letter: P
Question
Perform trend analysis on the MHS statement of revenue and expenses.
APPENDIX 28-A Metropolis Health System’s Financial Statements and Excerpts from Notes
Metropolis Health System Balance Sheet March 31, 20X3 and 20X2
Assets
Current Assets
Cash and cash equivalents
$1,150,000
$400,000
Assets whose use is limited
825,000
825,000
Patient accounts receivable
8,700,000
8,950,000
Less allowance for bad debts
(1,300,000)
(1,300,000)
Other receivables
150,000
100,000
Inventories of supplies
900,000
850,000
Prepaid expenses
200,000
150,000
Total Current Assets
10,625,000
9,975,000
Assets Whose Use Is Limited
Corporate funded depreciation
1,950,000
1,800,000
Under bond indenture agreements—held by trustee
1,425,000
1,475,000
Total Assets Whose Use Is Limited
3,375,000
3,275,000
Less Current Portion
(825,000)
(825,000)
Net Assets Whose Use Is Limited
2,550,000
2,450,000
Property, Plant, and Equipment, Net
19,300,000
19,200,000
Other Assets
325,000
375,000
Total Assets
$32,800,000
$32,000,000
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Metropolis Health System Balance Sheet March 31, 20X3 and 20X2
Liabilities and Fund Balance
Current Liabilities
Current maturities of long-term debt
$525,000
$500,000
Accounts payable and accrued expenses
4,900,000
5,300,000
Bond interest payable
300,000
325,000
Reimbursement settlement payable
100,000
175,000
Total Current Liabilities
5,825,000
6,300,000
Long-Term Debt
6,000,000
6,500,000
Less Current Portion of Long-Term Debt
(525,000)
(500,000)
Net Long-Term Debt
5,475,000
6,000,000
Total Liabilities
11,300,000
12,300,000
Fund Balances
General Fund
21,500,000
19,700,000
Total Fund Balances
21,500,000
19,700,000
Total Liabilities and Fund Balances
$32,800,000
$32,000,000
1. Your unit’s gross charges for the period to date amount to $200,000.
2. The uniform gross charge for each procedure in your unit is $100.
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3. The unit receives revenue from four major payers. The number of procedures performed for the period totals 2,000. Of that total, the number of procedures per payer (stated as a percentage) is as follows:Payer 1 = 30%Payer 2 = 40%Payer 3 = 20%Payer 4 = 10%
4. The following contractual payment arrangements are in effect for the current period. The percentage of the gross charge that is currently paid by each payer is as follows:Payer 1 = 80% [Medicare]Payer 2 = 70% [Commercial managed care plans]Payer 3 = 50% [Medicaid]Payer 4 = 90% [Self-pay]
Q: How many procedures are attributed to each payer?
Q: How much is the net revenue per procedure for each payer, and how much is the contractual allowance per procedure for each payer?
Q: How much is the total net revenue for each payer, and how much is the total contractual allowance for each payer?
Metropolis Health System Balance Sheet March 31, 20X3 and 20X2
Assets
Current Assets
Cash and cash equivalents
$1,150,000
$400,000
Assets whose use is limited
825,000
825,000
Patient accounts receivable
8,700,000
8,950,000
Less allowance for bad debts
(1,300,000)
(1,300,000)
Other receivables
150,000
100,000
Inventories of supplies
900,000
850,000
Prepaid expenses
200,000
150,000
Total Current Assets
10,625,000
9,975,000
Assets Whose Use Is Limited
Corporate funded depreciation
1,950,000
1,800,000
Under bond indenture agreements—held by trustee
1,425,000
1,475,000
Total Assets Whose Use Is Limited
3,375,000
3,275,000
Less Current Portion
(825,000)
(825,000)
Net Assets Whose Use Is Limited
2,550,000
2,450,000
Property, Plant, and Equipment, Net
19,300,000
19,200,000
Other Assets
325,000
375,000
Total Assets
$32,800,000
$32,000,000
Explanation / Answer
Payer 1 Payer 2 Payer 3 Payer 4 Total % of procedure 30% 40% 20% 10% 100% No of Procedures attributed 600 800 400 200 2000 Net Revenue: Payer 1 Payer 2 Payer 3 Payer 4 Total Net Revenue: No of Procedure 600 800 400 200 2000 Revenue (No of procedure x 100) 60000 80000 40000 20000 200000 Contractual Payment 48000 56000 20000 18000 142000 contructual Allowence 12000 24000 20000 2000 58000 Contractual allowance per procedure 20 30 50 10 29 Payer 1 Payer 2 Payer 3 Payer 4 Total Total Revenue 48000 56000 20000 18000 142000 Revenue per procedure 80 70 50 90 71