HCA301 Healthcare Finance assignment 1-6

Week 3
Assignment 1

HCA301
Healthcare Finance

Assignment 1

Resources

Read/review the
following resources for this activity:

•Textbook:
Chapter 10, 11, 13, 14

•Lecture 1, 2

•File: HCA301
Week 3 Assignment 1 Template.xlsx (in Course Documents)

Introduction

Analyzing costs
is both an important and a difficult aspect of a healthcare financial manager’s
job duties. Understanding costs and
their components can aid financial managers in increasing profits for the
healthcare organization and ensuring future successes of the organization.

Activity
Instructions

Use the
financial information for Metropolis Health System (MHS) located in Chapter 28
and Appendix 28-A to complete the following analyses:

1. Use the
following charts to calculate liquidity ratios, solvency ratios, and
profitability ratios for MHS:

Liquidity Ratios
Numerator
Denominator
Ratio

Current

Quick

Days Cash on
Hand (DCOH)

Days Receivables

Solvency Ratios
Numerator
Denominator
Ratio

Debt Service Coverage (DSCR)

Liabilities to
Fund Balance

Profitability Ratios
Numerator
Denominator Ratio

Operating

Margin (%)

Return on Total Assets (%)

1.Use the template (in Course Documents) to
Common Size the MHS statement of revenue and expenses from financial statements
located in Appendix 28-A.

2. Why are these
calculations important and how can they be used in the decision-making process
of healthcare financial managers?

Writing
Requirements (APA format)

•Provide all
calculations required by the questions for each scenario. Include any narrative
required to support or explain your calculations.

•1-inch margins

•Double spaced

•12-point Times
New Roman font

•Title page with
topic and name of student

Liquidity Ratios		Numerator	Denominator	Ratio
Current
Quick
Days Cash on Hand DCOH
Days in Receivables
Solvency Ratios		Numerator	Denominator	Ratio
Debt Service Coverage Ratio DSCR				#DIV/0!
Liabilities to Fund Debt				0.526
Profitability Ratios		Numerator	Denominator	Ratio
Operating Margin				#DIV/0!
Return on Assets				#DIV/0!

HCA301 Healthcare
Finance
Assignment 1

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Resources
Read/review the
following resources for this activity:

·
Textbook: Chapter 7, 8, 9

·
Lecture 1, 2

Introduction
Analyzing costs is
both an important and a difficult aspect of a healthcare financial manager’s
job duties. Understanding costs and their components can aid financial
managers in increasing profits for the healthcare organization and ensuring
future successes of the organization.

Activity Instructions
Review each scenario
and complete the questions for each. Include all calculations and provide
any narrative needed to support your calculations.

Scenario 1:
The Metropolis Health
System (MHS) has a system-wide training course for nurse aids. The course
requires a packet of materials that MHS calls the training pack. Due to
turnover and because the course is system-wide, there is a monthly demand for
new packs. In addition, the local community college also obtains the
training packs used in their credit courses from MHS.

The education
coordinator needs to know how much of the cost is fixed and how much of the
cost is variable for these training packs. She decides to use the
high-low method of computation.

·
Question 1:Using the monthly utilization information presented below, find
the fixed and variable portion through the high-low method. (10 points)

Month	Number of Training Packs	Cost
January	1,000	$6,200
February	200	$1,820
March	250	$2,350
April	400	$3,440
May	700	$4,900
June	300	$2,730
July	150	$1,470
August	100	$1,010
September	1,100	$7,150
October	300	$2,850
November	250	$2,300
December	100	$1,010

·
Question 2:The education coordinator decides that the community college
packs may be unduly influencing the high-low computation. She decides to
rerun the results, omitting the community college volume.

Month	Total Number of Training Packs	Total Cost	Community College Number Packs	Community College Cost
January	1,000	$6,200	200	$1,240
February	200	$1,820
March	250	$2,350
April	400	$3,440
May	700	$4,900	300	$2,100
June	300	$2,730
July	150	$1,470
August	100	$1,010
September	1,100	$7,150	300	$1,950
October	300	$2,850
November	250	$2,300
December	100	$1,010

a. Using
the monthly utilization information presented here, and omitting the community
college training packs, find the fixed and variable portion of costs through
the high-low method. Note that the college only acquires packs in three
months of the year: January, May, and September. These dates coincide
with the start dates of their semesters and summer school. (5 points)
b. The reason the education coordinator needs to know how much of
the cost is fixed is because she is supposed to collect the appropriate
variable cost from the community college for their packs. For her
purposes, which computation do you believe is better? Why? (5 points)

Scenario 2:
The Mental Health
program for the Community Center has just completed its fiscal year end.
The program director determines that his program has revenue for the year of
$1,200,000. He believes his variable expense amounts to $205,000 and he
knows his fixed expense amounts to $1,100,000.

·
Question 1:Compute the contribution margin for the Community Center Mental
Health Program. What does the result tell you about the program? (10
points)

·
Question 2:Compute the profit-volume ratio for the Community Center Mental
Health Program. What does the result tell you about the program? (10
points)

Scenario 3:
Assume that MHS
purchased equipment for $600,000 cash on April 1 (the first date of its fiscal
year). This equipment has an expected life of 10 years. The salvage
value is 10% of cost. No equipment was traded in on this purchase.

·
Question 1:Compute the straight-line depreciation for this purchase (10
points)

·
Question 2:Compute the double-declining balance depreciation for this purchase.
(10 points)

Writing Requirements
(APA format)

·
Provide all calculations required by the questions for each
scenario. Include any narrative required to support or explain your
calculations.

·
1-inch margins

·
Double spaced

·
12-point Times New Roman font

·
Title page with topic and name of student

Assignment 2: Small
Group Project

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Resources
Read/review the
following resources for this activity:

·
Textbook: Chapter 10, 11, 12, 13, 14

·
Lecture 1, 2

·
Minimum of 1 outside resource in addition to the textbook

Introduction
Healthcare financial
managers rarely work in isolation. They must work with other departments
to accurately capture needs and costs, as well as each other to ensure
forecasts and total financial statement analyses are accurate. Working
with a group, whether in the office or through electronic communication,
requires practice and patience.

Activity Instructions

Background
The Chief Financial
Officer at Sample General Hospital has just discovered that the hospital’s
Chief of Medical Staff’s son Jason, a student at the local community college,
is paid $100 per week year-round for grounds maintenance at the hospital’s
Outpatient Center.

The CFO, no fan of the
Chief of Medical Staff, now wants you to prepare a report that compares the
relative costs of lawn care at each of three locations: the hospital itself,
the outpatient center, and the hospital-affiliated nursing home down the block.

Relevant Information
Working with these
facilities, your group has compiled the following background information for
these three facilities.

Introduction to the
Three Facilities
Sample General
Hospital is an older, 100-bed hospital. The new Outpatient Center, built
last year, is across the street and the Golden Age Nursing Facility is down one
block, on the corner. The hospital is located in the mid-western Sunbelt;
there is occasional frost in the winter but no snow.

Grounds Maintenance
Tasks That Should Be Performed At All Three Sites

·
Mowing and edging

·
Walk sweeping

·
Raking leaves

·
Blowing off parking lot

·
Flower bed maintenance (where necessary)

·
Hedge trimming and minor tree pruning (major tree trimming is
performed by a contractor on an as-needed basis and thus should be disregarded)

The following figure
provides a map that illustrates the layout of the grounds for each facility and
their proximity to each other.

Grounds Maintenance
Arrangements for the Three Facilities
The current grounds
maintenance arrangements vary among the three facilities as follows:

1.
Sample Hospital uses its Maintenance Department employees for
grounds care. The hospital pays these employees $15 per hour plus 15% employee
benefits; it is estimated they spend 1,000 hours per year on grounds
maintenance work. Another estimated 120 hours per year are spent on maintaining
the lawn care equipment. The employees use a riding lawn mower, edger and
blower, all owned by the hospital. The hospital just bought a new mower for
$2,995 less a ten percent discount. It is expected that the mower should last
for five years.

2.
The hospital’s Chief of the Medical Staff’s son Jason, a student
at the local community college, is paid $100 per week year round for grounds
maintenance at the hospital’s Outpatient Center. A friend sometimes helps, but
when that happens Jason son pays him out of his weekly $100. It takes about one
and a half hours to mow, edge and blow. Jason uses his dad’s riding mower
and blower, but Jason recently bought his own edger. Jason also buys fertilizer
for the grass twice a year.

3.
The Nursing Facility contracts with a landscape service on a
seasonally adjusted sliding scale. The landscape service is paid $600 per month
from April to October (mowing season); $400 per month for February, March and
November; and $200 per month for November, December and January. The landscape
service provides all their own equipment. They also provide fertilizer and
provide annuals to plant in the flower beds every quarter.

Sample Hospital
Property Description

The grounds to be
maintained are as follows:

·
The front lawn is grass in two sections on either side of the
front entrance. Each section is about 50’ by 60’.

·
There is a hedge along the front of the building that is about
50’ on either side of the front entrance.

·
There are two small matching flower beds on either side of the
front entrance.

·
Another strip of grass along side of the building is 30’ by
100’.

·
A third small strip of grass about 5’ by 25’ is by the Emergency
entrance.

·
The walkway dimensions are as follows: about 50’ of front walk;
about 30’ of staff entrance walk, both of which are 5’ wide.

·
The Emergency Department’s paved patient drop-off area is about
25’ by 30’.

·
The parking lot surface is about 200’ by 250’. Along one side
are overhanging trees that drop leaves and debris and are a constant sweeping
problem. These are the only trees on the hospital site.

Outpatient Center
Property Description

The grounds to be
maintained are as follows:

·
There is a strip of grass at the front of the building that is
12’ wide and 65’ long, split in the middle by a walkway 5’ wide.

·
There is a strip of grass at the back of the building between
the building and the parking lot that is 5’ wide and 50’ long

·
All the rest of the property is paved.

Nursing Center
Property Description

Golden Age Nursing
Center occupies one whole block. The grounds have many large trees.
Flowerbeds have been planted around the trees as well as along the front walk
and entrance. There are also two secured patio areas at the side of the
building screen by hedges and each has a small bed of annuals. Because of
the unique design of the building grounds maintenance requires considerable
handwork.

Required Assignment
Review the available
information for grounds maintenance at the three facilities. Decide how
to convert this information into comparable data. Then prepare a report,
based on your assumptions, that presents comparable costs of grounds
care. Also, provide your assessment of what the best future course of
action should be.

Additional financial
information and financial statements can be found in Appendix 28-A of your
text. Consider the costs at each site and report costs as well as
recommendations to reduce costs while maintaining grounds for the three
locations.

Writing Requirements
(APA format)

·
3-4 pages (approx. 300 words per page), not including title page
or references page

·
1-inch margins

·
Double spaced

·
12-point Times New Roman font

·
Title page with topic and name of student

·
References page (minimum of 2 resources)

HCA301 Healthcare
Finance
Assignment

---

Resources
Read/review the
following resources for this activity:

·
Textbook: Chapter 17, 18

·
Lecture 1, 2

·
File: HCA301 Week 5 Assignment Template.xlsx (in Course
Documents)

·
Minimum of 2 outside resources in addition to the textbook (at
least 1 must be a TU Library resource).

Introduction
As we have discussed
this week, forecasts and budgets in healthcare organizations are rarely 100%
accurate due to difficulties in forecasting from unknown patient needs and
healthcare law changes.

Activity Instructions

Background
Greenview Hospital
operated at 120 percent of normal capacity in two of its departments during the
year. It operated 120 percent times 20,000 normal capacity direct labor nursing
hours in routine services and it operated 120 percent times 20,000 normal
capacity equipment hours in the laboratory.

The lab allocates
overhead by measuring minutes and hours the equipment is used; thus equipment
hours.

Assumptions:

For Routine Services
Nursing:

·
20,000 hours x 120% = 24,000 direct labor nursing hours.

·
Budgeted Overhead at 24,000 hours = $42,000 fixed plus $6,000 variable
= $48,000 total.

·
Actual Overhead at 24,000 hours = $42,000 fixed plus $7,000
variable = $49,000 total.

·
Applied Overhead for 24,000 hours at $2.35 @ = $56,400.

For Laboratory:

·
20,000 hours x 120% = 24,000 equipment hours.

·
Budgeted Overhead at 24,000 hours = $59,600 fixed plus $11,400
variable = $71,000 total.

·
Actual Overhead at 24,000 hours = $59,600 fixed plus $11,600
variable = $71,200 total.

·
Applied Overhead for 24,000 hours at $3.455 @ = $82,920.

Required Activity

1.
Use the template (in Course Documents) to complete the following
worksheets to calculate volume variance, budget variance, and net variance. (40
points)

2.
Discuss 3-4 possible benchmarks for each Routine Services
Nursing and the Laboratory. How can reaching these benchmarks affect income
and expenses for each department and how would these benchmarks be included in
a variance and/or sensitivity analysis? (30 points)

Writing Requirements
(APA format)

·
2-3 pages (approx. 300 words per page), not including
worksheets, title page or references page

·
1-inch margins

·
Double spaced

·
12-point Times New Roman font

·
Title page with topic and name of student

·
References page (minimum of 2 resources)

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Worksheet 1: Volume Variance	Routine Nursing Services	Laboratory
Applied Overhead Costs
Less: Budgeted Overhead Costs
Volume Variance	0	0
Worksheet 2: Budget Variance	Routine Nursing Services	Laboratory
Budgeted Overhead Costs @ 24,000 Hours
Less: Actual Overhead Costs
Budget Variance	0	0
Worksheet 3: Net Variance	Routine Nursing Services	Laboratory
Volume Variance	0	0
Less: Actual Overhead Costs	0	0
Budget Variance	0	0

HCA301 Healthcare Finance
Assignment 1

---

Resources
Read/review the
following resources for this activity:

·
Textbook: Chapter 12, 19, 20, 21

·
Lecture 1, 2

·
File: HCA301 Week 6 Assignment 1 Template.xlsx (in Course
Documents)

·
Minimum of 2 outside resources in addition to the textbook

Introduction
The concept of the
time value of money is important in capital expenditure decisions as the
present value of future cash flows must offset the present cost of the asset.

Activity Instructions
Cost of owning and
cost of leasing tables are reproduced below.

Using the appropriate
table from the Chapter 12 Appendix and the template (in Course Documents),
record the present value factor at 10% for each year and compute the present
value cost of owning and the present value of leasing. Which alternative is
more desirable at this interest rate? Do you think your answer would change if
the interest rate were six percent instead of ten percent?

Writing Requirements
(APA format)

·
1-inch margins

·
Double spaced

·
12-point Times New Roman font

·
Title page with topic and name of student

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@10%			Complete yellow cells, Green will calculate the Sum
Cost of Owning – Anywhere Clinic – Comparative Present value
For Profit Cost of Owning:	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
Net Cash Flow
Present Value Factor @ 10%	n/a
Present Value		0	0	0	0	0
Total Present Value cost of Owning
0
Cost of Leasing – Anywhere Clinic – Comparative Present value
For Profit Cost of Owning:	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
Net Cash Flow						0
Present Value Factor @ 10%	n/a
Present Value		0	0	0	0	0
Total Present Value cost of Leasing
0
Differential in Own versus Lease	0
@6%			Complete yellow cells, Green will calculate the Sum
Cost of Owning – Anywhere Clinic – Comparative Present value
For Profit Cost of Owning:	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
Net Cash Flow
Present Value Factor @ 6%	n/a
Present Value		0	0	0	0	0
Total Present Value cost of Owning
0
Cost of Leasing – Anywhere Clinic – Comparative Present value
For Profit Cost of Owning:	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
Net Cash Flow						0
Present Value Factor @ 6%	n/a
Present Value		0	0	0	0	0
Total Present Value cost of Leasing
0
Differential in Own versus Lease	0

Read/review the
following resources for this activity:

·
Textbook: Chapter 19, 20, 21

·
Lecture 1, 2

Introduction
As we have learned
this week, the decision to purchase or lease can become quite com

Explanation & Answer

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