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2 pages/β‰ˆ550 words
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Health, Medicine, Nursing
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English (U.S.)
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Healthcare Finance: Franklin Healthcare

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Academic paper, WHOLE paper will have to be cited. Franklin Healthcare reported revenues of $1,500 million in 2010 and $1,250 million in 2011. The revenue streams were comprised of 25% patient revenue, 50% third-party revenue, and the remaining 25% was a combination of grants and investments. The hospital spent $25 thousand in marketing for each of the past two years. The average daily patient population ranged from 500 in 2010 to 400 patients in 2011. Franklin reported operating expenses and depreciation of $500 thousand in 2010 but due to layoffs and reorganization operating expenses decreased by $200 thousand in 2011. Hospital 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. Case Assignment 1.Construct an income statement based on the information provided in the scenario. 2.Discuss your suggestions to the Williams Foundation based on your interpretation of the income statement. Is the facility financially healthy? Should the Foundation reconsider their grant?

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Healthcare Finance: Franklin Healthcare
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Background
Non-for-profit healthcare institutions are increasingly looking for ways to improve revenue streams. However, it is a concern that expenses typically grow faster than revenues. Similarly, rates from both Medicaid and Medicare determine the revenue prospects of hospitals, meaning that foundations will continue to play a bigger role if there are rate reductions from government programs. Nonetheless, it still remains to be seen what will the impact of the Affordable Care Act on funding non- for-profit hospitals. In order for foundations that fund and grant funds to assess viability of funding, then there is a need to look into the financial statements of the recipients especially the income statement. Increase in revenue signals shows potential for growth in any organization and ability to cover costs as they fall due (Baker & Powell, 2009).
Part 1: Income Statement
Franklin Healthcare Income Statement For the years ended 2010 and 2011( in $ Thousands)20112010REVENUESPatient revenue (781.25*400) & (750*500)312,500375,000third party revenue625,000750,000Grants and revenues312,500375,000Total Revenue1,250,0001,500,000EXPENSESMarketing costs2525Operating expenses & depreciation300500Total Expenses325525Excess of Revenue over expenses1,249,6751,499,475
Part 2
Interpretation
In the case of Franklin Healthcare, there is a need to continue funding the organization. The number of patients is projected to remain almost the same, but has fallen as shown by a reduction of 100 patients from 2010 to 2011. This means that the patient revenue will also decrease, unless, the organization results to increasing fees charged, and invests more. Nonetheless, increasing the costs of medical care is potentially harmful to the organization’s finances, as more patients ...
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