Explain why the ratios are different between the managed care and nursing home industries.
Be Show more Consider the following financial statements for BestCare HMO a not-for-profit managed care plan: BestCare HMO Statement of Operations and Change in Net Assets Year Ended June 30 2012 2012(in thousands) Revenue: Premiums earned $26682 Coinsurance 1689 Interest and other income 242 Total revenue $28613 Expenses: Salaries and benefits $ 15154 Medical supplies and drugs 7507 Insurance 3963 Provision for bad debts 19 Depreciation 367 Interest 385 Total expenses $27395 Net income $ 1218 Net assets beginning of year $ 900 Net assets end of year $ 2118 Assets Cash and cash equivalents $ 2737 Net premiums receivable 821 Supplies 387 Total current assets $ 3945 4 0 1C h a p t e r 1 3 : A n a l y z i n g F i n a n c i a l C o n d i t i o nGa pe ns ki _1: La yout 1 5/ 1/ 09 10: 24 AM Pa ge 401 Net property and equipment $ 5924 Total assets $ 9869 Liabilities and Net Assets Accounts payablemedical services $ 2145 Accrued expenses 929 Notes payable 141 Current portion of long-term debt 241 Total current liabilities $ 3456 Long-term debt $ 4295 Total liabilities $ 7751 Net assets (equity) $ 2118 Total liabilities and net assets $ 9869 Green Valley Nursing Home Inc. Statement of Income and Retained Earnings Year Ended December 31 Revenue: Net patient service revenue $3163258 Other revenue 106146 Total revenues $3269404 Expenses: Salaries and benefits $1515438 Medical supplies and drugs 966781 Insurance and other 296357 Provision for bad debts 110000 Depreciation 85000 Interest 206780 Total expenses $3180356 Operating income $ 89048 Provision for income taxes 31167 Net income $ 57881 Retained earnings beginning of year $ 199961 Retained earnings end of year $ 257842 Examine the industry average ratios given in Problems 13.4 and 13.5. Explain why the ratios are different between the managed care and nursing home industries. Show less
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