Financial Statement Analysis of Doctors Hospital 2013–2014

Introduction

Financial statements are essential in measuring and assessing the real financial strength and position of a company. These statements provide quantifiable data and help individuals obtain an understanding of a company's forthcoming forecasts and risks (Weygandt et al., 2008). The purpose of this paper is to review the financial statements of Doctors Hospital for the years 2013 and 2014, analyze those statements, and assess the hospital's financial well-being. In addition, the paper outlines the role played by Advanced Practice Nurses (APNs) in the financial welfare of the organization.

The Role of Advanced Practice Nurses in Financial Well-Being

Very minimal studies have been undertaken in the United States regarding the cost-effectiveness and economic impact of primary care delivered by advanced practice nurses. Results from various research studies indicate that, on the basis of insurance claims comparing costs incurred by physicians against those of advanced nurse practitioners and the efficacy of retail clinics, lower costs are linked with primary care rendered by APNs (Naylor and Kurtzman, 2010). According to Hughes and O'Grady (2008), the rapid advancement and success of the advanced practice nurses movement has been characterized as a disruptive innovation. This is because advanced practice nurses, in several forms and settings, render similar or even better healthcare compared to physicians, at a lower cost and in a more convenient setting (Hughes and O'Grady, 2008). Moreover, advanced practice nurses generate quality care and patient safety, better clinical performance, and more satisfactory patient outcomes. Fully incorporating the contributions and expertise of all primary care practitioners — and, specifically, the contributions of nurse practitioners — is a significant guiding principle in attaining high-value health care (Naylor and Kurtzman, 2010).

APNs play a significant role within healthcare organizations. They have attained the level of education, training, and expertise necessary to carry out many of the primary-care responsibilities typically executed by physicians. APNs contribute directly to the financial well-being of healthcare organizations because patients can obtain primary care from APNs at lower cost, which simultaneously increases patient satisfaction. The healthcare organization benefits from these decreased expenses by having APNs provide primary care rather than relying solely on physicians. Furthermore, increased patient satisfaction encourages patients to return and also increases both outpatient and inpatient volume, resulting in greater revenue and profit for the organization (Nursing World, 2012).

The Significance of Financial Statements

The financial activities of any organization's business operations are reported in three basic financial statements: the income statement, the balance sheet, and the cash flow statement. The income statement — also referred to as the profit and loss statement — is of great significance to the financial welfare and standing of an organization (Baker and Powell, 2005). It indicates how the organization has performed by revealing the amount of revenue generated, the expenses incurred, and the resulting profit or loss. The balance sheet, also referred to as the statement of financial position, is important because it offers a report on an organization's assets, liabilities, and equity. In essence, the balance sheet provides detailed information concerning the financial strength of the organization, how income was utilized, the valuation of property, plant, and equipment, and the cycles of receivables and payables (Baker and Powell, 2005).

The cash flow statement is the third financial statement and outlines the manner in which cash entered and left the organization. It serves as a record that identifies where cash originated and where it was directed. Moreover, it is an important planning tool with regard to the organization's long-term financial success (Walters, 2012). Critically, the cash flow statement offers insight into an organization's financial welfare that income statements and balance sheets alone cannot provide. For instance, it can reveal that the management or owners of the organization are withdrawing excessive cash — a detail that cannot be perceived in the income statement or balance sheet — or that the organization is running out of money regardless of whether it appears profitable at a given point in time (Walters, 2012).

Conclusion

APNs play a significant role in the financial well-being of healthcare organizations. Advanced practice nurses generate quality care and patient safety, better clinical performance, and more satisfactory patient outcomes. Statistics from the financial ratio analysis indicate that the financial health and well-being of Doctors Hospital improved from 2013 to 2014 with regard to liquidity, as reflected by the improved current ratio. However, there is a concerning aspect related to profitability, as the profit margin declined from 0.036 in 2013 to 0.032 in 2014. Similarly, the return on net assets declined from 0.026 in 2013 to 0.023 in 2014, indicating that profitability challenges warrant continued attention by hospital leadership.