Learning Module 3 – Mini Project # 1

Question #1

Affordable Care Act stipulates which of the following entities are eligible to participate as Accountable Care Organizations:

a. Professionals in group practice arrangements and networks of individual practices of professionals

b. Partnerships or joint ventures between hospitals and health professionals or hospitals employing professionals

c. Other groups of providers of services and suppliers as the Secretary determines appropriate

d. All the above

e. None of the above

Question # 2

The report, The Future of Nursing: Leading Change, Advancing Health (2011)

a. Was funded through the Patient Protection and Affordable Care Act

b. Requires that 80% of nurses are baccalaureate-prepared by 2020

c. Positions nurses to contribute to a transformed health care system

d. Requires that scope-of-practices barriers for nurses are removed

e. B and D

f. A and C

Question # 3

Health care, like other services, is an economic commodity. A basic assumption of economics is that:

a. People will buy more if they have more money

b. There are limited resources in every system

c. Health care use cannot be controlled using a market approach

d. Productivity will continue to go up

Question # 4

MagnetÒ hospitals are organizations recognized as providing excellent, high-quality nursing care, and excelling in all of the following areas except:

a. Transformational leadership

b. Structural empowerment

c. Exemplary professional practice

d. Empirical

e. New knowledge, innovations, and improvements

f. Theoretical quality outcomes

Question # 5

Assume that a nursing home balance sheet shows total assets of $20 million and total liabilities of $17 million. Can the fund balance be determined with any degree of certainty? Why or why not? If so, what is it?

Question # 6

On June 30, payroll of $10,000 was paid to the organization’s employees. What accounts would probably be affected by the journal entry on that date? On July 5, it was noted that $2000 of labor was charged to the nursing department in error and should have been charged to radiology. Should the organization bother making a journal entry to correct the error? Why or why not?

Question #7 (Parts 1 & 2)

The problems below are based on the following simplified financial statements for BCD Health Services:

BCD Health Services

Statement of Cash Flows

For the Fiscal Years Ending June 30, 2019 and 2018

Cash flows from operating activities
Collections from patients and third-party payers21,00016,000
Collections from other operating activities  2,000  1,400
Payments to suppliers  (1,700)    (800)
Interest payments  (2,000)  (2,000)
Payments to employees(15,100)(12,500)
Net cash from operating activities   4,200   2,100
Cash flows from investing activities
Purchase new equipment(3,000)0
Purchase marketable securities(200)0
Increase in sinking fund(200)(200)
Net cash from investing activities(3,400)(200)
Cash flows from financing activities
Payments of mortgage principal(2,000)(1,800)
New mortgage1,2000
Net cash used for financing activities  (800)(1,800)
Net increase/(decrease) in cash0    100
Cash, beginning of year500400
Cash, end of year500500

BCD Health Services

Statement of Financial Position

As of June 30, 2019 and 2018

Cash  500  500
Marketable securities  400  200
Accounts receivable, net of $400 and $300 allowance for bad debts3,0002,000
Inventory1,000   500
Prepaid assets   100   100
Total current assets5,000 3,300
Property, plant, and equipment43,00040,000
Less accumulated depreciation17,80016,000
Net property, plant, and equipment25,20024,000
Sinking fund   1,800  1,600
Investments     300     300
Total fixed assets27,300 25,900
Total32,300 29,200
Current liabilities
Wages payable  700  500
Accounts payable  7001,000
Notes payable  500   500
Deferred revenue  300   300
Taxes payable  100   100
Total current liabilities2,3002,400
Long-term liabilities
Mortgage payable 4,200 5,000
Bonds payable20,00020,000
Total long-term liabilities24,20025,000
Net assets
Unrestricted net assets  5,800  1,800
Total net assets  5,800  1,800

BCD Health Services

Statement of Operations

For the Fiscal Years Ending June 30, 2019 and 2018

Patient revenues 22,000 17,000
Other operating revenues   2,000   1,400
Total revenues24,000 18,400
Wages for clinical services 11,000 9,000
Patient care supplies and food      600    400
Housekeeping services      800    500
Operation and maintenance of plant   1,200 1,000
Administrative services    2,200 2,000
Depreciation and amortization    1,800 1,200
Bad debt expense      400   300
Interest   2,000  2,000
Total expenses 20,00016,400
Increase in unrestricted net assets   4,000  2,000

Part 1. Using these simplified financial statements for BCD Health Services, complete the following ratios for both 2018 and 2019:

  1. Common size cash
  2. Common size current liabilities
  3. Common size wages for clinical services
  4. Current ratio
  5. Debt service coverage
  6. Plant age
  7. Revenue to assets
  8. Profit margin

Part 2. What do these ratios tell you about the financial health of this organization?

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