HCAD 640 Financial Analysis John Hopkins Health System

HCAD 640 Financial Analysis John Hopkins Health System.

HCAD 640 Financial Analysis John Hopkins Health System.

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Financial Analysis of Johns Hopkins Health System (JHHS) Your Name Institution HCAD 640: Financial Management for Healthcare Organizations Instructor Date 1 Introduction The Johns Hopkins Health System (JHHS), named after philanthropist Johns Hopkins, provides a wide range of healthcare services to Maryland residents. JHHS is a Maryland corporation in charge of policy formulation and centralized management for JHHS and its affiliates (Pages – maryland hospital audited financial statements, 2022). According to Apilado (2021), JHHS is operated to promote health by functioning as a parent holding company of affiliates whose combined objective is to provide patient care in the treatment and prevention of human illness that compares favorably with that provided by any other institution. JHHS now consists of six hospitals as well as a large network of specialty services. It serves as the flagship of the group of hospitals that includes Johns Hopkins Bayview Medical Center, Howard County General Hospital, Suburban Hospital, Sibley Memorial Hospital, and Johns Hopkins All Children’s Hospital. 2 Methodology Ratio Analysis • Ratios are used to compute the relative size Trend Analysis • To evaluate statements for incremental from one number in relation to another change patterns, the trend analysis will be (Famuyide, 2021). After calculating a ratio, it used. A change in financial statements can can be compared to a similar ratio calculated indicate increased income or decreased for a previous period to determine whether expenses (Famuyide, 2021). This entails JHHS performance is in line with set going over financial statements from three expectations. or more different time periods. This presentation will go over five years of data • Ratios have been generalized into four categories: liquidity ratios, profitability ratios, from Pages – Maryland Hospital audited financial statements (2022). operating efficiency ratios, and capital structure ratios. 3 PESTLE Analysis Political Factor JHHS is committed to adhering to all applicable laws and regulations, especially those addressing health care fraud, waste, and abuse, as well as those that interfere with the proper billing of Medicare, Medicaid, and other government-funded health care programs. This includes the False Claims Act and any state laws or enforcement policies that are applicable(Butanis, 2022). Economic Factor JHHS is considered a private corporation, so it it subjected to certain tax exemptions that can economically benefit the organization. Social Factor According to Appleseed (2015), JHHS is at the forefront of the ongoing transformation of the nation’s health-care system. JHHS will work to keep Maryland, Washington, D.C., and St. Petersburg at the forefront of the nation’s efforts to increase access to, improve the quality of, and lower the cost of healthcare. Technological Factor Electronic Medical Records (EMR) has allowed JHHS to become more efficient in hospital operations such as registration, documentation, and information exchange (The Economic Impact of Johns Hopkins Health System 2015). Legal Factor Focus on safety, quality and value through the Armstrong Institute for Patient Safety and Quality (Apilado, 2021). Environmental Factor Operating rooms have become fully equipped with LED lighting and energy-efficient heating, ventilation and air conditioning settings during unoccupied times, reducing energy used when the rooms are not in use (Sachs, 2019). 4 SWOT Analysis Strengths Weaknesses Collected from The Economic Impact of Johns Hopkins Health System (2015): ● Overall patient care ● Community engagement ● Set medical precedents by means of clinical trials and experimental treatment ● Leader in the healthcare field ● Strong reputation, attracts talent and funding opportunities ● Assisted in nationwide government programs. Collected from Hospital cost compare: Medical and surgery costs at Johns Hopkins: ● Seek opportunities to capitalize on treating the immediate community that do not have health insurance ● Invest in additional training practices to assist less informed employees ● Research future EMR practices and incentives that the government will provide to offset future expenses Opportunities Threats Collected from Hospital cost compare: Medical and surgery costs at Johns Hopkins: ● Cost of treatment ● Less focus on operations than on treatment Collected from The Economic Impact of Johns Hopkins Health System (2015): ● Costly treatment for the uninsured ● Data breaches regarding patient transparency ● Incorrect tax filing ● Loss of stakeholder support due to the assisting of laws that negatively impact the hospital ● Inputting wrong data that can be generate inaccurate reports 5 Liquidity: Current Ratio and Net Working Capital Description 2017 2018 2019 2020 2021 Current Assets $1,624,057 $1,590,826 $1,793,765 $2,002,938 $2,324,900 Current Liabilities $1,631,049 $1,210,979 $1,309,379 $1,659,519 $1,505,242 Current Ratio 1.0 1.3 1.4 1.2 1.5 Net Working Capital (6992) 379,847 484,386 343,419 819,658 6 Profitability: Return on Equity and Earnings Before Tax, Interest, Depreciation, and Amortization Description 2017 2018 2019 2020 2021 Current Income $153,157 $189,882 $81,191 $45,726 $50,419 Current Assets $1,624,057 $1,590,826 $1,793,765 $2,002,938 $2,324,900 ROA 9.4% 11.9% 4.5% 22.8% 15% EBITDA 478,430 536,034 434,129 322,815 711,494 7 Operating Efficiency: Fixed Asset Turnover Description 2017 2018 2019 2020 2021 Total Operating Revenue $6,153,011 $6,558,492 $6,826,871 $7,110,483 $7,807,785 Total Fixed Assets $2,890,563 $2,974,269 $3,064,023 $2,958,596 $2,786,963 Fixed Asset Turnover Ratio 2.13 2.20 2.23 2.40 2.80 8 Operating Efficiency: Average Payment Days Description 2017 2018 2019 2020 2021 Total Current Liabilities x 365 $595,332,885 $441,642,335 $477,923,335 $605,724,435 $549,413,330 Total Operating Expenses $5,999,854 $6,368,610 $6,745,680 $7,156,209 $7,457,366 Depreciation and Amortization Expenses $275,512 $286,160 $291,553 $310,708 $311,538 A/P Days 104.00 72.60 74.05 88.49 76.89 9 Capital Structure: Debt Ratio and Equity Multiplier Description 2017 2018 2019 2020 2021 Total Liabilities $4,396,556 $4,301,795 $4,631,679 $5,413,969 $4,849,497 Total Assets $8,263,612 $8,477,461 $8,748,020 $9,223,406 $10,093,217 Shareholder’s Equity $3,867,056 $4,175,666 $4,116,341 $3,809,437 $5,243,720 Debt Ratio 0.53 0.51 0.53 0.57 0.48 Equity Multiplier 2.14 2.03 2.12 2.42 1.92 10 Financial Health Assessment Functions Indicators Financial Health Profitability Return on Assets EBITDA Good Standing Liquidity Current Ratio Net Working Capital Good Standing Operating Efficiency A/P Days Fixed Asset Ratio Good Standing Debt Ratio Equity Multiplier Good Standing Capital Structure 11 Major Takeaways

● The Johns Hopkins Health System (JHHS) is a non-profit corporation that serves as the holding organization for The Johns Hopkins Hospital and its affiliated hospitals. General medicine, emergency/trauma care, pediatrics, maternity care, long term care, and various specialized areas of medicine are among the inpatient and outpatient health services provided by JHHS. ● SWOT and PESTLE analysis were able to assist in identifying factors influencing the industry and activities of JHHS, as well as understanding the strategic healthcare marketing plan for the organization. ● The ratio and trend analysis was able to determine that JHHS has a strong financial performance, which is supported by their budget and resources to advance medical discovery, education, and patient care through the implementation of financial best practices. 12 References Apilado, P. (2021, December 30). HCAD 640 Financial Analysis John Hopkins Health System

The johns hopkins hospital. John Hopkins Medicine. https://www.hopkinsmedicine.org/the_johns_hopkins_hospital/ Appleseed. (2015). (rep.). The Economic Impact of Johns Hopkins Health System (pp. 1–51). New York City, NY. Retrieved March 19, 2022, from https://web.jhu.edu/administration/gca/projects/publications-and-reports/economic-impactreport/EIR%20Documents/EIR%202014/JHHS%20Report.pdf. Butanis, B. (2022, February 2). About Us. Johns Hopkins Corporate Compliance Department. Retrieved March 19, 2022, from https://www.hopkinsmedicine.org/compliance/about_us.html Famuyide, S. (2021, February 4). Methods of financial analysis. Business Analyst Learnings. Retrieved March 19, 2022, from https://www.businessanalystlearnings.com/ba-techniques/2016/6/11/methods-of-financial-analysis Hospital cost compare: Medical and surgery costs at Johns Hopkins. Hospital Cost Compare | Medical and surgery costs at Johns Hopkins. (n.d.). HCAD 640 Financial Analysis John Hopkins Health System

Retrieved March 19, 2022,  from https://www.hospitalcostcompare.com/hospitals/210009/inpatient Pages – maryland hospital audited financial statements. (2022). The Maryland Health Services Cost Review Commission. https://hscrc.maryland.gov/pages/hsp-afs.aspx Sachs, K. (2019, April). Sustainability stats and tips from the Johns Hopkins Hospital. Johns Hopkins Medicine. Retrieved March 19, 2022, from