Unit 1 Db Hlth420

Topics: Income statement, Financial statements, Cash flow Pages: 1 (272 words) Published: June 20, 2013
Healthcare providers and facilities generate revenue by providing services and receiving reimbursement from cashing paying individuals, health insurance companies, and Medicare and Medicaid for the services rendered. They also obtain revenue from state and federal grants. Donations made by foundations, individuals, and community service & outreach programs are another source of revenue (Access Project, n.d.). Hospitals can generate revenue from parking fees, gift shop and cafeteria sales, equipment rentals, and research grants (Access Project, n.d.).

The three major reports to track information are financial statements such as income statements, balance sheets, and cash flow statements. Income statements, also known as Profit and Loss Statements, focus on operations over a specified period of time. This type of statement supplies profitability information. A balance sheet provides an image of the organizations financial health at a specific time. A cash flow statement is responsible for supplying the transactions of cash in and out of the organization.

There are several reasons why financial statements are important, other than tax purposes. To name a few, financial statements are necessary is to balance a budget. These types of statements are necessary to track investment performance or obtain prospective investors. Information related to finances is necessary for owners and managers to make important business decisions. These statements are part of the annual management reports to stockholders. Financial statements are also important to track debt and significant expenditures.


Access Project. (n.d.) A Community Leader’s Guide to Hospital Finance. Retrieved from http://www.accessproject.org/downloads/Hospital_Finance.pdf

Cleverley, W. O. (1992). Essentials of Healthcare Finance (3rd ed). Gaithersburg, MD: Aspen Publications. Chapters 2, 4, and 6.
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