Case Study Analysis Discussion—SMH Revenue and Income Cycle Variables

The SMH financial statement contains additional data that will allow you to conduct an analysis of revenue efficiency factors. Using this data, you will measure revenue and expense cycle variables and determine the impact on net income. You will use this data again in Module 4.

In this assignment, you will calculate variable expenses including labor, supply, and drug costs. You will also compare profitability by payer. The SMH data file, which you had downloaded from the Doc Sharing area, contains data on revenue and expenses, categorized by department. You will determine revenue and expenses for two departments. Instructions are included in the data file. You will discuss the impact of payer mix and cost control on the profitability of a hospital. Based on your analysis, discuss the impact of payer mix and cost control on the profitability of a hospital.

Using the SMH data file, you will do the following:

• Create a table that shows gross profit (patient revenue – direct expenses) for inpatient and outpatient services.
• Calculate gross profit (GP) margins for both services.
• Calculate GP per patient day and per operating theater (OT) procedure.
• Compare your expenses to your benchmark data. (Because some of the comparative data does not have sufficient detail this may be a high-level review.)
• Comment on the services from the perspective of expense and revenue distribution and explain why there are differences between GP margins.
• Complete a table that includes other expenses and other revenue. The table should clearly distinguish between direct and indirect expenses.
• Comment on why other income and contributions are critical to the survival of the organization. Does the reliance on investment income mean that the organization will take a higher risk in order to increase income?

Write a 4- to 5-page paper in Word format. You will use Excel to conduct your cost and revenue analysis. The data from Excel can be placed in the Word document as either tables or an appendix. You will also submit your Excel file content so that the calculations can be reviewed.