Financial Reporting
What is the effect of revenue sources on financial reporting at the hospital? o How are the hospital’s revenues and expenses grouped for planning and control? (one section) dennis
HOW IS FINANCIAL PERFORMANCE MEASURED?
Measuring hospital financial performance is commonly performed by analyzing margins (I.e., the difference in revenue vs. expenses). Margins can be expressed by using financial ratios and as dollar amounts. OSHPD uses two financial ratios to measure a hospital’s financial performance. Both ratios compare the revenue received by a hospital against its operating expenses. The difference lies in what revenue items are included in each ratio formula. OSHPD also looks at the number of hospitals operating at a “profit” or “loss” for each of these …show more content…
Net patient revenue includes the payments received for routine nursing care, emergency services, surgery services, lab tests, etc.
Other operating revenue is the amount received from non-patients for services related to hospital operations. This includes items such as cafeteria sales, refunds on purchases, vending machine commissions, parking lot revenue, etc. Since other operating revenue typically comprises between 2% to 4% of a hospital’s total operating revenue, it often determines if a hospital’s operating margin is “in the black” (profit) or “in the red” (loss).October 2010
Total operating expenses include all expenses associated with operating the hospital, such as salaries, employee benefits, purchased services, supplies, professional fees, depreciation, rentals, interest, and insurance. It does not include bad debts or income
HOW IS FINANCIAL PERFORMANCE MEASURED?
Measuring hospital financial performance is commonly performed by analyzing margins (I.e., the difference in revenue vs. expenses). Margins can be expressed by using financial ratios and as dollar amounts. OSHPD uses two financial ratios to measure a hospital’s financial performance. Both ratios compare the revenue received by a hospital against its operating expenses. The difference lies in what revenue items are included in each ratio formula. OSHPD also looks at the number of hospitals operating at a “profit” or “loss” for each of these …show more content…
Net patient revenue includes the payments received for routine nursing care, emergency services, surgery services, lab tests, etc.
Other operating revenue is the amount received from non-patients for services related to hospital operations. This includes items such as cafeteria sales, refunds on purchases, vending machine commissions, parking lot revenue, etc. Since other operating revenue typically comprises between 2% to 4% of a hospital’s total operating revenue, it often determines if a hospital’s operating margin is “in the black” (profit) or “in the red” (loss).October 2010
Total operating expenses include all expenses associated with operating the hospital, such as salaries, employee benefits, purchased services, supplies, professional fees, depreciation, rentals, interest, and insurance. It does not include bad debts or income