Healthcare Accounting- Parkland Hospital

Healthcare Accounting- Parkland Hospital
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Healthcare Accounting- Parkland Hospital
Founded in 1894, Parkland Hospital has grown to be one of the largest teaching hospitals in America. The Dallas-based hospital considers itself one of the country's most stable public health systems and an effective steward of public funds (Parkland, n.d.). One of the hospital's goals is to help residents of Dallas who cannot go anywhere else for health. In 2020, the hospital provided a staggering $1.1 billion in uncompensated care (Parkland, n.d.). This means that it serves numerous individuals who do have insurance or are unable to afford the cost of care. Based on Parkland's 2021 and 2020 financial statements, the sections that follow examine the revenues and expenses of the hospital, its reimbursement strategy, and how it can use its financial performance to build its brand.
The financial statements for Parkland Hospital provide, among other aspects, a summary of the revenues and expenses of the company for 2019, 2020, and 2021 (Parkland, 2021). This is useful in identifying the trends in revenues and expenses to determine what can improve. In 2019, Parkland had total operating revenues of $1,579,109,000, which rose to $1,828,385,000 in 2020. In 2021, the total operating revenues for the hospital rose to $1,970,094,000. The rise is attributed to all the three items that make up the operating revenues: net patient services, government programs, and others. On the other hand, the hospital also experienced a steady rise in operating expenses. The total operating expenses in 2019 was $2,077,401,000, which rose to $2,303,024,000 in 2020. In 2021, the total operating expenses stood at $2,532,206,000. It is clearly evident that Parkland has been operating at a loss for the last three years and the hospital's financial statements show that the operating loss has been rising over the years.
The hospital's 2021 budget is not present, but from the 2020 budget, a few things can be deduced. From the 2020 budget, there is a big mismatch between the projected revenues and expenses and the actual expenses and revenues. In 2020, the Parkland Health & Hospital System Board of Managers approved a budget where the total operating revenues were projected to be $2,336,649,000, with the projected operating expenses being $2,139,540,000 (The County of Dallas, 2019). However, at $1,828,385,000, the actual 2020 operating revenues were way below the budget. Similarly, at $2,303,024,000, the actual operating expenses exceeded the budget's figure significantly. Therefore, the 2020 budget and actual revenues and expenses show that Parkland Hospital lacks the operational discipline to a great extent. However, the hospital has been able to bank on non-operational revenues, particularly ad valorem tax revenues, which has helped it maintain positive net positions at the end of each of the three years covered by the financial statements. Therefore, when non-operational revenues such as ad valorem tax revenues are taken into consideration, Parkland Hospital was on course to meet its goals revenue-wise. However, the actual expenditure was way above the budgeted expenditure for expenses. Neverth...