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
| 2019 | 2018 | |
| Cash flows from operating activities | ||
| Collections from patients and third-party payers | 21,000 | 16,000 |
| 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 mortgage | 1,200 | 0 |
| Net cash used for financing activities | (800) | (1,800) |
| Net increase/(decrease) in cash | 0 | 100 |
| Cash, beginning of year | 500 | 400 |
| Cash, end of year | 500 | 500 |
BCD Health Services
Statement of Financial Position
As of June 30, 2019 and 2018
| 2019 | 2018 | |
| Assets | ||
| Current | ||
| Cash | 500 | 500 |
| Marketable securities | 400 | 200 |
| Accounts receivable, net of $400 and $300 allowance for bad debts | 3,000 | 2,000 |
| Inventory | 1,000 | 500 |
| Prepaid assets | 100 | 100 |
| Total current assets | 5,000 | 3,300 |
| Fixed | ||
| Property, plant, and equipment | 43,000 | 40,000 |
| Less accumulated depreciation | 17,800 | 16,000 |
| Net property, plant, and equipment | 25,200 | 24,000 |
| Sinking fund | 1,800 | 1,600 |
| Investments | 300 | 300 |
| Total fixed assets | 27,300 | 25,900 |
| Total | 32,300 | 29,200 |
| Equities | ||
| Current liabilities | ||
| Wages payable | 700 | 500 |
| Accounts payable | 700 | 1,000 |
| Notes payable | 500 | 500 |
| Deferred revenue | 300 | 300 |
| Taxes payable | 100 | 100 |
| Total current liabilities | 2,300 | 2,400 |
| Long-term liabilities | ||
| Mortgage payable | 4,200 | 5,000 |
| Bonds payable | 20,000 | 20,000 |
| Total long-term liabilities | 24,200 | 25,000 |
| Net assets | ||
| Unrestricted net assets | 5,800 | 1,800 |
| Total net assets | 5,800 | 1,800 |
| Total | 32,300 | 29,200 |
BCD Health Services
Statement of Operations
For the Fiscal Years Ending June 30, 2019 and 2018
| 2019 | 2018 | |
| Revenues | ||
| Patient revenues | 22,000 | 17,000 |
| Other operating revenues | 2,000 | 1,400 |
| Total revenues | 24,000 | 18,400 |
| Expenses | ||
| 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 | 20,000 | 16,400 |
| 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:
- Common size cash
- Common size current liabilities
- Common size wages for clinical services
- Current ratio
- Debt service coverage
- Plant age
- Revenue to assets
- Profit margin
Part 2. What do these ratios tell you about the financial health of this organization?
