Methodist Hospital Financial Analysis
The health care system consists of all organizations within a community to make it a functional operation. This includes stakeholders, investors, and other financial partners within a health care system. Health care systems cannot provide care for their patients without the financial structure of the organization. The financial structure is truly the core of the organization. The success or failure of a health care system depends on the ability to run a strong financial operation behind the scenes while providing quality care to patient. All three entities for-profit, not-for-profit, and government funding organizations have financial structures that create their organization success or demise.
Financial Structure Methodist Hospital is a private not-for-profit organization that provides medical services to society. One of the largest charitable hospitals in the United States, the financial resources are given and an allowance given in accordance with the hospitals mission. The hospitals financial structure allows excess revenues or expenses for a certain period. Excess revenues are only shown if reserving for implementing new programs, broadening services or for purposes inconsistent with the hospitals mission …show more content…
(Bain, 1999). Financial statements for the hospital show the financial structure of the organization. Methodist hospital reports $70,142,650 in charitable care within 2012. This report includes organizations debits, costs of compliance with anti-dumping laws, contractual adjustments, Courtesy discounts, and Charity care. With the hospitals charitable care tax exemption status benefits the hospitals finances. The exemption benefit for this report states the organization shows 35 million per year in tax benefits. The benefits include Federal income tax exemption, state excise, and franchise tax exemption, state poverty tax exemption, state sales tax exemption, lower interest rates on bonds, acceptation charitable contributions, donations from pharmaceutical companies, research grants, and reduced labor costs (Bain, 1999). The ratio shows these values are tax exemptions for the organization:
Federal: $66,546,326 × .36 = $23,956,677
State: 66,546,326 × .05 = 3,327,316
Property: 245,000,000 × .0232 = 5,684,000
Sales: 661,485,740 × .0825 = 5,072,574
Interest: 301,100,000 × .02 = 6,022,000
Sum of direct benefits: $44,062,567 Not-for-profit organization would disagree with the financial structure of the Methodist Hospital charitable donations in the fiscal year was over the amount charitable organizations allow. The tax exemptions alone are over the amount most not-for- organization claim. The state of Texas found these findings to be fraudulent and started a case to further investigate the financial structure of the organization in 1990s (Bain, 1999). Community Health Systems, Inc. is a leading acute care hospital within the United States. Community Health Systems has 135 hospitals in 29 states, serving 55% of the American population. The financial structure of this organization operates on revenue and profit margins to allow the organizations continuing success. In 2012 Community Health Systems was shown on the Fortune 500 as raking 198 as America’s largest corporation (CNN, 2012). Community Health systems is a for-profit organization that revenue shows 13,817 million in 2012. Estimates show that this revenue will continue to increase in 2013. Profits from the revenue were 201.9 million. Assets show 15.208.8 million, Stockholders equity 2,397.6 million. Market Value of the organization as of March 29th, 2012 shows 2,309.6 million dollars (CNN, 2012). The Center for Disease Control and Prevention (CDC) is a government funding health care organization. The purpose of the CDC is to ensure the safety of all Americans from disease and preventing the spread of disease on all levels. Financial structures of this organization are different from those of a not-for-profit or for-profit organization. Governance Structure or Working Capital Fund (WCF) is led by a governance board with 15 CDC leaders. These leaders determine the votes on aspects of the rates, and service levels (CDC, 2013). The unique structure of the financial structure for governmental organizations is the CDC organization itself does not conclude the finances. The finances are receivable through the CDC to U.S. Department of Health and Human Services (HHS). The government has set up the financial reports, analyzing, and accounting to be final by HHS with the allowance of the CDC governance board to vote on rates and service levels. The Department of Health and Human Services annually reports the financials of the CDC. The CDC does not directly conduct the full report or establish the financial structure. CDC does report their financial statements to the HHS for them to audit and conduct their financial findings to the Chief Financial Officer (CDC, 2013).
Management Practices The purpose of financial management is to plan for, and use funds to increase the success of the organization. Capital finance is another term for financial management. Most financial management functions includes certain protocols that assist with the success of managing finances these include: Evaluations and Planning, Long-term investment decisions, financing decisions, working capital management, contract management, and financial risk management (Gapenski, 2010). In all three organizations the financial management shows these examples of protocols assets to the organizations financials. The government funding CDC organization is unique by decision and investment making abilities to their organization. CDC instead has the government conducting these financial decisions, allowing them as outsider of the financial management for the organization. Examples such as the one for the CDC financial management operations can be a reason why health care organizations have more difficulty with effective financial management than other organizations. The purpose of financial management, statements, and relevant financial tasks is to provide the financial information necessary to investors, stakeholders, donors, members, creditors, and others who have a hand in the organizations financial success.
Most organizations both For-profit, not-for-profit or government ran organizations adopt holding company structures. Financial management can be a challenging position among the health care industry. There are ways to enhance the financial management positions within a health care organization. Creating managerial incentives plans, such as offering stock options allowing managers to purchase stock within the organization, performance shares are also an incentive for financial managers (Gapenski,
2010). Health Care organizations have alternatives other than incentives when if comes to financial management. Managers can use other resources to subtract some of the financial hardship in several ways. Some include taking advantage of the economy, and tax exemptions much like the charitable tax exceptions the Methodist Hospital took advantage of when conducting their financial statements. Health care organization has the hardship of financial management among a very competitive industry. The focus can become blurry at times so the ability for the organizations financial management to stay on track is a vital part of the organizations success (Gapenski, 2010). .
References
Bain, Craig Ph.D., CPA (1999); The State of Texas vs. the Methodist Hospital System: An
Accounting Case Study; (Working Paper Series 99-02); Colleges of Business Administrations; Retrieved from Website; http://franke.nau.edu/images/uploads/fcb/99-02.pdf; Retrieved on October 11th, 2013.
Fortune 500 magazine; Annual ranking of American’s Largest Corporations; Retrieved from website;http://money.cnn.com/magazines/fortune/fortune500/2012/snapshots/10904.html Retrieved on October 11th, 2013.
Centers for Disease and Control; Retrieved from website;http://www.cdc.gov/fmo/topic/wcf/structure.html; Retrieved on October 11th, 2013.
Gapenski, (2010); Health Care financial Management fifth edition; Part I Health Care
Environment; Retrieved from website; www.cte.rockhurst.edu; Retrieved on October 12th, 2013.
Financial Structure Methodist Hospital is a private not-for-profit organization that provides medical services to society. One of the largest charitable hospitals in the United States, the financial resources are given and an allowance given in accordance with the hospitals mission. The hospitals financial structure allows excess revenues or expenses for a certain period. Excess revenues are only shown if reserving for implementing new programs, broadening services or for purposes inconsistent with the hospitals mission …show more content…
(Bain, 1999). Financial statements for the hospital show the financial structure of the organization. Methodist hospital reports $70,142,650 in charitable care within 2012. This report includes organizations debits, costs of compliance with anti-dumping laws, contractual adjustments, Courtesy discounts, and Charity care. With the hospitals charitable care tax exemption status benefits the hospitals finances. The exemption benefit for this report states the organization shows 35 million per year in tax benefits. The benefits include Federal income tax exemption, state excise, and franchise tax exemption, state poverty tax exemption, state sales tax exemption, lower interest rates on bonds, acceptation charitable contributions, donations from pharmaceutical companies, research grants, and reduced labor costs (Bain, 1999). The ratio shows these values are tax exemptions for the organization:
Federal: $66,546,326 × .36 = $23,956,677
State: 66,546,326 × .05 = 3,327,316
Property: 245,000,000 × .0232 = 5,684,000
Sales: 661,485,740 × .0825 = 5,072,574
Interest: 301,100,000 × .02 = 6,022,000
Sum of direct benefits: $44,062,567 Not-for-profit organization would disagree with the financial structure of the Methodist Hospital charitable donations in the fiscal year was over the amount charitable organizations allow. The tax exemptions alone are over the amount most not-for- organization claim. The state of Texas found these findings to be fraudulent and started a case to further investigate the financial structure of the organization in 1990s (Bain, 1999). Community Health Systems, Inc. is a leading acute care hospital within the United States. Community Health Systems has 135 hospitals in 29 states, serving 55% of the American population. The financial structure of this organization operates on revenue and profit margins to allow the organizations continuing success. In 2012 Community Health Systems was shown on the Fortune 500 as raking 198 as America’s largest corporation (CNN, 2012). Community Health systems is a for-profit organization that revenue shows 13,817 million in 2012. Estimates show that this revenue will continue to increase in 2013. Profits from the revenue were 201.9 million. Assets show 15.208.8 million, Stockholders equity 2,397.6 million. Market Value of the organization as of March 29th, 2012 shows 2,309.6 million dollars (CNN, 2012). The Center for Disease Control and Prevention (CDC) is a government funding health care organization. The purpose of the CDC is to ensure the safety of all Americans from disease and preventing the spread of disease on all levels. Financial structures of this organization are different from those of a not-for-profit or for-profit organization. Governance Structure or Working Capital Fund (WCF) is led by a governance board with 15 CDC leaders. These leaders determine the votes on aspects of the rates, and service levels (CDC, 2013). The unique structure of the financial structure for governmental organizations is the CDC organization itself does not conclude the finances. The finances are receivable through the CDC to U.S. Department of Health and Human Services (HHS). The government has set up the financial reports, analyzing, and accounting to be final by HHS with the allowance of the CDC governance board to vote on rates and service levels. The Department of Health and Human Services annually reports the financials of the CDC. The CDC does not directly conduct the full report or establish the financial structure. CDC does report their financial statements to the HHS for them to audit and conduct their financial findings to the Chief Financial Officer (CDC, 2013).
Management Practices The purpose of financial management is to plan for, and use funds to increase the success of the organization. Capital finance is another term for financial management. Most financial management functions includes certain protocols that assist with the success of managing finances these include: Evaluations and Planning, Long-term investment decisions, financing decisions, working capital management, contract management, and financial risk management (Gapenski, 2010). In all three organizations the financial management shows these examples of protocols assets to the organizations financials. The government funding CDC organization is unique by decision and investment making abilities to their organization. CDC instead has the government conducting these financial decisions, allowing them as outsider of the financial management for the organization. Examples such as the one for the CDC financial management operations can be a reason why health care organizations have more difficulty with effective financial management than other organizations. The purpose of financial management, statements, and relevant financial tasks is to provide the financial information necessary to investors, stakeholders, donors, members, creditors, and others who have a hand in the organizations financial success.
Most organizations both For-profit, not-for-profit or government ran organizations adopt holding company structures. Financial management can be a challenging position among the health care industry. There are ways to enhance the financial management positions within a health care organization. Creating managerial incentives plans, such as offering stock options allowing managers to purchase stock within the organization, performance shares are also an incentive for financial managers (Gapenski,
2010). Health Care organizations have alternatives other than incentives when if comes to financial management. Managers can use other resources to subtract some of the financial hardship in several ways. Some include taking advantage of the economy, and tax exemptions much like the charitable tax exceptions the Methodist Hospital took advantage of when conducting their financial statements. Health care organization has the hardship of financial management among a very competitive industry. The focus can become blurry at times so the ability for the organizations financial management to stay on track is a vital part of the organizations success (Gapenski, 2010). .
References
Bain, Craig Ph.D., CPA (1999); The State of Texas vs. the Methodist Hospital System: An
Accounting Case Study; (Working Paper Series 99-02); Colleges of Business Administrations; Retrieved from Website; http://franke.nau.edu/images/uploads/fcb/99-02.pdf; Retrieved on October 11th, 2013.
Fortune 500 magazine; Annual ranking of American’s Largest Corporations; Retrieved from website;http://money.cnn.com/magazines/fortune/fortune500/2012/snapshots/10904.html Retrieved on October 11th, 2013.
Centers for Disease and Control; Retrieved from website;http://www.cdc.gov/fmo/topic/wcf/structure.html; Retrieved on October 11th, 2013.
Gapenski, (2010); Health Care financial Management fifth edition; Part I Health Care
Environment; Retrieved from website; www.cte.rockhurst.edu; Retrieved on October 12th, 2013.