Understanding an Income Statement

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Assessment #1: Understanding an Income Statement

You are an intern in a health care organization business office. Use the Dehew Health System income statement in the attachment, please develop a 4-6 page paper responding to the following questions regarding the income statement: (The income statement is attached)

1. What is an income statement used for?

2. What are the key components of an income statement?

3. On your example of an income statement, is the organization making a profit or loss? How much is that profit or loss? Show the calculations. (Total Revenues – Total Expenses = Net Profit/Loss)

4. On your example of an income statement, what is the “total contribution margin”? Show the calculations. (Net Sales – Total Variable Costs=Total Contribution Margin). You can use the assumption that volume is 15,000 if not included in financial statements.

5. What three financial indicators does a contribution margin help determine? How?

6. What is a break-even analysis? What is the break-even point for this organization? List expenses assigned as variable and fixed. Show the calculations. (Total revenues – Total VC – Total FC= Profit)

7. How does a break-even analysis vary between fee-for-service and capitated payments? Explain it using the income statement you chose. What are the similarities and differences applicable to the Income statements in fee-for-service and capitated payment options?

The paper should not be more than 6 pages and should follow APA format, spelling and grammar. Include a cover page and reference page (not included in the page count). Make sure to properly cite and reference all the used sources. The calculations need to be shown as formulas using figures. Follow the mathematical rules while calculating numbers.

 

Income Statement Below – For some reason I can’t attach the document.

Dehew Healthcare System

(Sample Organization)

 

 

FY19

 

 

 

FY18

 

INCOME

 

 

 

 

 

 

 

Gross Patient Revenue

 

$30,981,629

 

 

 

$23,072,676

 

Deductions from Revenue

 

 

 

 

 

 

 

Contractual Allowances

 

$14,995,326

 

 

 

$11,000,000

 

Charity Care

 

$1,735,909

 

 

 

$1,560,000

 

Provision for Bad Debt

 

$641,786

 

 

 

$575,000

 

Total Deductions from Patient Revenue

 

$17,373,021

 

 

 

$13,135,000

 

Net Patient Revenue

 

$13,608,608

 

 

 

$9,937,676

 

Premium Revenue

 

$65,882

 

 

 

$56,000

 

Other Revenue

 

$289,856

 

 

 

$150,000

 

Total Net Revenue

 

$13,964,346

 

 

 

$10,143,676

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

SALARIES AND WAGES

 

$8,925,000

 

 

 

$8,000,000

 

S&W – REGULAR (Line Staff)

 

$3,470,400

 

 

 

$3,000,000

 

S&W – REGULAR Executive/Management/Providers)

 

$5,204,600

 

 

 

$4,800,000

 

PHYSICIAN DIRECTOR FEES

 

$250,000

 

 

 

$200,000

 

EMPLOYEE BENEFITS EXPENSES

 

$290,000

 

 

 

$304,427

 

SUPPLIES EXPENSE

 

$81,930

 

 

 

$52,906

 

MEDICAL SURGICAL SUPPLIES

 

$50,555

 

 

 

$35,000

 

DRUGS

 

$7,010

 

 

 

$4,843

 

GENERAL SUPPLIES

 

$21,033

 

 

 

$9,884

 

WEARING APPAREL EXPENSE

 

$1,657

 

 

 

$1,354

 

CLEANING COMPOUNDS

 

$1,674

 

 

 

$1,825

 

PURCHASED SERVICES

 

$21,163

 

 

 

$21,189

 

OFFSITE RECORD STORAGE

 

$3,566

 

 

 

$1,752

 

ANSWERING SERVICES

 

$12,811

 

 

 

$11,723

 

GARBAGE AND REFUSE REMOVAL

 

$2,325

 

 

 

$1,150

 

POSTAGE/COURIER SERVICE

 

$2,462

 

 

 

$6,565

 

PURCHASED OUTSIDE SERVICES

 

$15,598

 

 

 

$27,459

 

SECURITY SERVICE

 

$1,528

 

 

 

$838

 

CLEANING SERVICE

 

$14,070

 

 

 

$26,621

 

FACILITIES EXPENSE

 

$462,882

 

 

 

$423,538

 

RENT – EXPENSE

 

$459,844

 

 

 

$408,552

 

REPAIRS & MAINTENANCE (T&M)

 

$1,865

 

 

 

$10,250

 

ELECTRICITY

 

$1,172

 

 

 

$4,736

 

OTHER OPERATING EXPENSES

 

$324,448

 

 

 

$255,271

 

LICENSURE FEES

 

$962

 

 

 

$100

 

INSURANCE – PROF. LIABILITY

 

$238,093

 

 

 

$200,000

 

TRAVEL/SEMINARS/MEETINGS

 

$38,209

 

 

 

$14,999

 

EQUIPMENT RENTALS

 

$5,957

 

 

 

$7,111

 

ED.SUPPLIES/MEMBERSHIP FEES

 

$41,227

 

 

 

$33,061

 

INTRASYSTEM ALLOCATION

 

$750,000

 

 

 

$700,985

 

Total Operating Expenses

 

$10,871,020

 

 

 

$9,785,775

 

Net Income/Loss

 

$3,093,326

 

 

 

$357,901

 

Units of Service

 

40,800

 

 

 

35,000

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