The Mountain View hospital is a small rural hospital situated in Las Vegas in the United States. Just like most rural hospitals, it is facing major financial problems as a result of many shortcomings. These financial issues are reflected on the financial statements of the hospital for example the balance sheet. This paper analyses the financial statements of the hospital to determine the causative discrepancies and thereafter suggested remedial actions of the same. A comparison of the balances as 31st December 2006 and 31st December 2007 shows an increase in the balancing figure by $ 4437931. This difference is a result of changes in the balance sheet contents which may be positive or negative (Gibson, 2009, p.45). However, the increase can be accredited to the current liabilities which have gone up by $ 441666 which is a figure close to the aforementioned. This is an indication that the hospital has increased its liabilities by increasing its creditors as depicted by the balance sheet. The current value of the hospital’s creditors has almost doubled. This may be have been caused by the increased supply of medical types of equipment to use on the large number of patients who on the other hand are uninsured and not able to pay the medical costs incurred. The increase in workers’ salaries has also an impact on the liabilities figure since it has led to the increase in the accrued salaries, benefits, and payroll taxes figure. It can also be seen that the amount due to Medicare has almost tripled indicating that the hospital is not doing well financially.
The value of the patient accounts receivable has doubled in the current year as a result of the large number of patients who receive treatment from the hospital yet do not have enough funds to pay for it. This can be due to the reason that the hospital is located in a rural setting which is comprised of a big population of people with low income. The hospital has tremendously increased the value of its expenses as a result of higher insurance costs, rising costs of pharmaceuticals, and other miscellaneous costs. The hospital has also embarked on making short-term investments most likely because of the rising demand for patients’ services. The decrease in the value of restricted bond proceeds has an impact on the financial position of the hospital since the hospital is not gaining from those bonds. It is as a result of this that the overall financial situation of the hospital depicts a loss in some of its funds.
From the above discussion, it can be concluded that the hospital is undergoing a severe financial hardship which calls for immediate remedial actions. Since the main reason is because of the many patients of low income and uninsured, the hospital should request immediate support from the government. It should also request subsidies in pharmaceuticals and other medical types of equipment.
This can be simultaneously done by purchasing low-priced but highly effective drugs for the patients. On the situation of increased salaries, if the government is not in a position to offer assistance the hospital management may be forced to reduce the number of staff to remain with few qualified and efficient staff that is able to multitask. Last but not least, the hospital should reduce the number of accounts payable by purchasing more on cash than on credit (Gibson, 2009, p.47). Adoption of these actions will improve the financial position of Mountain View hospital.
Reference List
Gibson, C. (2009). Financial Reporting and Analysis. Web.