Healthcare Finance Report: JFK University Medical Centre

This report presents a financial analysis of JFK University Medical Centre, a non-profit healthcare facility located in Stanford, California. The analysis covers the facility's background, including its establishment and operational history, and examines its financial performance using balance sheets, income statements, and cash flow statements from 2017 and 2018. The report highlights the sources of revenue, including patient service and premium revenue, as well as operating expenses such as salaries, professional services, and supplies. A comparison between the budgeted and actual operating performance for 2018 reveals discrepancies in revenue and expenses. The report also includes a discussion of the facility's cash flow activities, including operating, investing, and financing activities. The analysis concludes with a discussion of the financial implications and recommendations for future financial management, emphasizing the need for cost control to ensure the sustainability of the medical center and its research endeavors. The report is based on data provided in the assignment and references relevant literature on healthcare finance and management.

Running head: HEALTHCARE FINANCE
Healthcare Finance
Name of the Student:
Name of the University:
Authors Note:

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HEALTHCARE FINANCE
Contents
Facility and its background along with description:........................................................................2
Budgeted information of JFK University Medical Centre:.............................................................2
Sources used:.................................................................................................................................11
References:....................................................................................................................................12

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HEALTHCARE FINANCE
Facility and its background along with description:
Located at 201 Pasteur Drive in Stanford, California, JFK University Medical Centre is a
renowned medical centre in the United States of America. The medical centre includes both
General Healthcare and Children’s Healthcare. Consistently ranked as one of the best hospitals in
the US, JFK University Medical Centre has a University campus along with main hospital
building, comprehensive cancer centre, health centre for neurosciences and other units of
medical centres.
The JFK Medical Centre is providing healthcare services in the US since 1990 when it was
founded. Established and co-owned by the City of Palo Alto. Since its establishment the centre is
providing excellent healthcare services to the people of the country (Symonds, 2016).
JFK University Medical Centre is a non-profit organization. However, over the years the
Medical centre has been managed to fund its activities including research activities from its own
sources. The current financial situation of the Medical centre is quite encouraging for the
management. In fact expect for the first two years of its establishment, i.e. 1990 and 1991 the
Medical Centre has been successful in earning surplus over and above its expenditures from its
operational activities. Considering that the Centre is a non-profit organization it is a clear
indication of proper management of the University Medical centre (Mathar, 2017).
Budgeted information of JFK University Medical Centre:
Balance sheet
Assets 2018 2017

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HEALTHCARE FINANCE
Current assets:
Cash and cash equivalent 135,870.00 122,283.00
Short term investments 125,700.00 113,130.00
Accounts receivable from patient after deducting doubtful
debts
132,870.00 119,583.00
Other receivables 125,700.00 113,130.00
Inventories 145,800.00 131,220.00
Prepaid expenses 127,000.00 114,300.00
Total current assets 792,940.00 713,646.00
Non-current assets
Investments 182,500.00 164,250.00
Univesrity managed pool of investmnets 75,000.00 67,500.00
Property and euipment 357,800.00 322,020.00
Assets held by trust 265,000.00 238,500.00
Other assets 221,000.00 198,900.00
Total non-current assets 1,101,300.00 991,170.00
Total assets 1,894,240.00 1,704,816.00

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HEALTHCARE FINANCE
Liabilities and net assets
Current liabilities 108,696.00 88,500.00
Accounts payable 100,560.00 90,504.00
Accrued liabilities 106,296.00 95,600.00
Accrued salaries of hospital staffs along with other
benefits due
100,560.00 90,504.00
Related party dues 116,640.00 104,976.00
Line of credit 101,600.00 91,440.00
Total current liabilities 634,352.00 561,524.00
Non-current liabilities
Swap liability 165,870.00 149,283.00
Long term liabilities 85,000.00 76,500.00
Pension liabilities 385,700.00 347,130.00
Debt and borrowing 197,850.00 178,065.00
Total non-current liabilities 834,420.00 750,978.00

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HEALTHCARE FINANCE
Total liabilities 1,468,772.00 1,312,502.00
Net assets
JFK health care 368,900.00 335,746.00
non-controlling interests 56,568.00 56,568.00
Total liabilities and net assets 1,894,240.00 1,704,816.00
Statement of operating revenue and expenditures:
Statement operations and changes in net assets
Operating revenues 2018 2017
Service revenue from patients 2,458,750.00 2,212,875.00
Provision for doubtful revenue 245,875.0
0
221,287.5
0
Net service revenue from patients after provision for doubtful
revenue
2,212,875.00 1,991,587.00
Premium revenue 885,150.0
0
796,635.0
0
Total operating revenue 3,098,025.00 2,788,222.00

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HEALTHCARE FINANCE
Operating expenses
Salaries 1,687,580.00 1,518,822.00
Professional service expenditure 563,700.0
0
507,330.0
0
Supplies 347,580.0
0
312,822.0
0
Services purchased 221,750.0
0
199,575.0
0
Depreciation and amortization 125,875.0
0
113,287.0
0
Interest expenditures 118,386.0
0
105,780.0
0
Total operating expenses 3,064,871.00 2,757,616.00
Operating income 33,154.0
0
30,606.0
0
Statement of cash flows:
Statement of cash flows

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HEALTHCARE FINANCE
2018 2017
Cash flows from operating activities
Change in net assets of JFK 33,154.00 31,750.00
Change in non-controlling interests in JFK - -
Total change in net assets in JFK 33,154.00 31,750.00
Net cash provided or used in operating activities
Depreciation and amortization 125,875.00 113,287.00
Provision for doubtful debts 245,875.00 221,287.50
Increase in University investmnet pool 7,500.00 6,850.00
Unrealized gain 15,780.00 14,870.00
Chnages in operating assets
Short term investments (12,570.00) (11,313.00)
Accounts receivable from patient after deducting
doubtful debts
(13,287.00) (11,958.30)
Other receivables (12,570.00) (11,313.00)
Inventories (14,580.00) (13,122.00)

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HEALTHCARE FINANCE
Prepaid expenses (12,700.00) (11,430.00)
Net cash generated from operating activities 362,477.00 328,908.20
cash flows from investing activities
Investment purchased (7,500.00) (6,750.00)
Purchase of University managed pool investment (18,250.00) (17,850.00)
Property and equipment acquired (35,780.00) (37,800.00)
Assets acquired (26,500.00) (21,500.00)
Other assets acquired (22,100.00) (24,870.00)
Net cash used in investment activities (110,130.00) (108,770.00)
Cash flow from financing activities
Repayment of debt (115,780.00) (104,202.00)
Proceeds from debt -
Cost of issuing debt 1,785.00
Payment of capital lease obligation (122,980.00) (110,682.00)
Net cash generated / (used) in financing activities (238,760.00) (213,099.00)
Net increase / (decrease) in cash equivalents 13,587.00 7,039.20

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HEALTHCARE FINANCE
Budgeted and actual performance:
Statement operations and changes in net assets for 2018
Operating revenues Actual Budget
Service revenue from patients 2,458,750.00 2,345,000.00
Provision for doubtful revenue 245,875.0
0
234,500.0
0
Net service revenue from patients after provision for doubtful
revenue
2,212,875.00 2,110,500.00
Premium revenue 885,150.0
0
988,500.0
0
Total oprerting revenue 3,098,025.00 3,099,000.00
Operating expenses
Salaries 1,687,580.00 1,675,000.00
Professional service expenditure 563,700.0
0
521,500.0
0

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HEALTHCARE FINANCE
Supplies 347,580.0
0
346,800.0
0
Services purchased 221,750.0
0
222,700.0
0
Depreciation and amortization 125,875.0
0
125,875.0
0
Interest expenditures 118,386.0
0
114,500.0
0
Total operating expenses 3,064,871.00 3,006,375.00
Operating income 33,154.0
0
92,625.0
0
Sources used:
Balance sheet:
The Balance sheet of the Medical Centre states the current financial position of the healthcare
institute by stating the amount of assets and liabilities of the institute.
Operating income statement:
Operating income statement of the healthcare centre shows that in 2018 the institute has earned
operating income from its operational activities.

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Statement of cash flows:
Statement of cash flows indicate that the healthcare institute has generated positive cash flows
from its operating activities (Chahal & Sharma, 2018).
Budget and actual operating performance:
The budgeted operating statement of JFK University Medical Centre shows that the actual
performance of the medical centre is actually better than the estimated performance in terms of
revenue generated from the patients are concerned. However, a closer look at the operating
income statement of the Medical Centre shows that though the Medical Centre has managed to
earn more revenue in 2018 than the budgeted but its operating income has in fact significantly
lower than the budgeted operating income. This is mainly due to the fact that the actual operating
expenditures of the Medical Centre in 2018 has increased more than the increase in operating
revenue in the year from the budgeted figures. Hence, it would be important for the management
of JFK University Medical Centre to take all necessary precautions in the future to reduce the
operating expenditures of the organization. These steps if successful in reducing the operating
expenditures in the future will help the organization to accumulate additional funds in the future
for conducting detailed research on various aspects of modern medical science.

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HEALTHCARE FINANCE
References:
Chahal, H., & Sharma, R. (2018). Managing Health Care Service Quality in a Primary Health
Care Centre. Metamorphosis: A Journal Of Management Research, 3(2), 112-131. doi:
10.1177/0972622520040204
Mathar, T. (2017). Managing Health(-Care Systems) Using Information Health
Technologies. Health Care Analysis, 19(2), 180-191. doi: 10.1007/s10728-010-0150-z
Symonds, A. (2016). Managing the Hospital Sales Team. Health Care Management
Review, 15(8), 95. doi: 10.1097/00004010-199001510-00019