| Course | HLTH 4383 Finance for Healthcare Administrators |
|---|---|
| Module | Module 1 |
| Paper type | Financial statement and ratio analysis |
| Length | 1,170 words, about 4 pages plus title and reference pages |
| Format | APA 7 student paper |
| School | American College of Education |
| Program | B.S. in Healthcare Administration |
| Updated | September 2026 |
Free sample paper for HLTH 4383 Module 1
Profitable on Paper, 27 Days From Empty: A Financial Statement and Ratio Analysis of a Hospital-Owned Ambulatory Surgery Center
Student Name
American College of Education
HLTH4383: Finance for Healthcare Administrators
Module 1 Assignment
Instructor Name
October 5, 2026
The Organization and the Question
This analysis examines a composite multispecialty ambulatory surgery center with four operating rooms and two procedure rooms. A nonprofit health system owns 51% of the center, and 22 surgeons own the remaining 49%. The center performs orthopedic, spine, ophthalmology, pain management, urology and general surgery cases, and until last year it also performed endoscopy for one gastroenterology group. Its fiscal year ends June 30.
The governing board asked a direct question after reviewing the fiscal 2026 statements: the center reported another profit, yet the administrator twice had to delay supplier payments in the spring. How can a center that earns $3 million a year run short of cash? Answering it requires reading the income statement, the balance sheet and the flow of cash between them, and comparing the results with the three targets the board set three years ago: an operating margin of at least 18%, at least 45 days cash on hand, and no more than 40 days in accounts receivable.
The Income Statement
Case volume fell from 8,210 in fiscal 2025 to 7,840 in fiscal 2026. The gastroenterology group opened its own endoscopy center and took about 610 cases with it, while orthopedic and spine cases grew by roughly 240. Net patient revenue slipped only slightly, from $18.9 million to $18.6 million, because the cases that left paid far less than the cases that arrived.
Operating expenses rose from $15.2 million to $15.6 million. Salaries and benefits increased from $5.9 million to $6.1 million after a market adjustment for operating room nurses and surgical technologists, and medical supplies and implants rose from $4.5 million to $4.9 million. Occupancy held at $1.4 million and depreciation at $0.9 million, while other expenses, including interest on the equipment loan, fell from $2.5 million to $2.3 million. Operating income therefore fell from $3.7 million to $3.0 million, and the operating margin, operating income divided by net patient revenue, fell from 19.6% to 16.1%, below the board's target for the first time.
Revenue and Cost per Case
Per-case ratios show what the totals hide. Revenue per case rose from $2,302 to $2,372 because the case mix moved toward orthopedics and spine. Supply cost per case rose faster, from $548 to $625, an increase of 14%, largely because implants for joint and spine procedures are expensive and are often not fully offset by what payers pay. Salary cost per case rose from $719 to $778, partly from the pay adjustment and partly because fixed staffing was spread over fewer cases. Put together, the center earns $70 more per case but spends about $136 more.
Efficiency is the center's main economic advantage. Munnich and Parente (2014) found that procedures performed in ambulatory surgery centers took on average 31.8 fewer minutes than the same procedures in hospitals, about a quarter of the mean procedure time, which they argued makes these centers a lower-cost setting for outpatient surgery. That advantage depends on keeping rooms full and turnovers short. The loss of endoscopy left the two procedure rooms idle on many afternoons, and the operating margin now reflects fixed costs carried by fewer cases.
Liquidity: Where the Profit Went
Days cash on hand measures how long an organization could pay its cash operating expenses from the cash it holds. It is calculated as cash divided by daily operating expenses excluding depreciation (Penner, 2017). The center ended fiscal 2025 with $1.6 million in cash, or about 41 days, and fiscal 2026 with $1.1 million, or about 27 days, far below the 45-day target. The current ratio, which sets what the center could turn into cash within a year against what it owes within a year, stayed at about 2.0 in both years, which looks healthy but is misleading, because most of the center's current assets are receivables rather than cash.
The statement of cash flows answers the board's question. The center generated $3.9 million from operating income plus depreciation, but $0.8 million of that stayed in unpaid claims, $0.7 million went to loan principal and $2.9 million was distributed to the owners, 97% of operating income. The center retained nothing and drew its cash down by $0.5 million. Physician ownership creates strong interest in distributions: Hollingsworth et al. (2010) found physician ownership of these centers associated with higher surgical volume in Florida data, which shows how directly owners respond to the center's financial incentives. The center did not lose money; it gave away all of it, and then some.
Receivables
Days in accounts receivable, the receivables balance divided by average daily net patient revenue, rose from about 41 days to about 57, well above the board's 40-day target. The balance grew from $2.1 million to $2.9 million even though revenue fell. Two causes stand out in the billing reports. The center changed billing vendors in October, and claims were held for six weeks while the new system was set up. The growth in orthopedic and spine cases also brought more prior authorization requirements, and denials for missing or expired authorizations rose from 3% to 7% of claims. Every day of receivables represents about $51,000 of revenue earned but not collected, so returning to 40 days would free roughly $870,000 in cash, almost enough to meet the days cash target by itself.
Solvency
The center's long-term position is sound. Its only debt is an equipment loan with an outstanding balance of $3.2 million and annual payments of about $950,000 in principal and interest. Debt service coverage, the cash available for debt service divided by the required payments, fell from about 5.0 to about 4.4 times, still well above the 1.5 times required by the loan agreement. The center is not at risk of default. Its problem is short-term liquidity caused by its distribution policy and its billing, not its debt.
What the Ratios Mean for the Board
The analysis supports three recommendations. First, the board should change its distribution policy so that the center retains half of operating income each quarter until days cash on hand reaches 45, after which distributions can return to 85% of income. At current results, the target would be reached in about four quarters, sooner if receivables improve. Second, management should bring days in receivables back to 40 within nine months by clearing the backlog held during the vendor change, adding an authorization check two business days before every orthopedic and spine case and holding the billing vendor to its contract standards. Third, the center should track supply cost per case by specialty rather than as one figure, so that the board can tell whether rising supply costs reflect a change in case mix or poor purchasing, and should set a target for filling the procedure rooms left empty by the loss of endoscopy.
None of these requires new revenue. The center's services remain profitable; what failed was the management of the cash that profit produces, and that can be corrected within a year.
References
Hollingsworth, J. M., Ye, Z., Strope, S. A., Krein, S. L., Hollenbeck, A. T., & Hollenbeck, B. K. (2010). Physician-ownership of ambulatory surgery centers linked to higher volume of surgeries. Health Affairs, 29(4), 683-689. https://doi.org/10.1377/hlthaff.2008.0567
Munnich, E. L., & Parente, S. T. (2014). Procedures take less time at ambulatory surgery centers, keeping costs down and ability to meet demand up. Health Affairs, 33(5), 764-769. https://doi.org/10.1377/hlthaff.2013.1281
Penner, S. J. (2017). Economics and financial management for nurses and nurse leaders (3rd ed.). Springer Publishing.
HLTH 4383 Module 1 instructions, in plain terms
HLTH 4383 Module 1 usually asks you to read a health care organization's financial statements the way an administrator would. Most prompts supply statements or ask you to find an organization's audited reports or IRS Form 990, then calculate a set of ratios across at least two years. Expect profitability, liquidity, activity and capital structure ratios, such as operating margin, days cash on hand, days in accounts receivable and debt service coverage. You are then asked to interpret the results rather than only report them: what changed, why, and what management should do. Some versions include benchmark comparisons; others use the organization's own targets. Show each formula once so the grader can follow your math, and check Canvas for whether a spreadsheet must be submitted alongside the paper.
How the HLTH 4383 Module 1 example is put together
The example starts with a question from the board, so every calculation serves an answer. It walks through the income statement line by line, explaining each change with an operational cause such as the departure of an endoscopy group. Per-case ratios then separate case mix from volume, and a study of procedure times explains why empty rooms hurt this kind of center. The liquidity section defines each ratio, computes it and reconciles the cash flow to show where the profit went. Receivables are analyzed for their causes and converted into dollars. A short solvency section keeps the risk in proportion by comparing coverage with the loan agreement. Three recommendations with targets and timelines close the paper, each tied to a ratio.
Where the points sit in the HLTH 4383 Module 1 rubric
Financial analysis rubrics in this course tend to reward three things: accurate calculations, sound interpretation and practical recommendations. The calculation criterion expects correct formulas applied consistently across years, and points are lost for mixing definitions, such as including depreciation in days cash. The interpretation criterion carries the most weight in many sections, and it rewards explaining why a ratio moved, not just that it moved. Graders also look for connections between statements, such as how profit relates to cash. Recommendations score well when they follow from specific findings and include measurable targets. Use of sources, clear organization of numbers in text or tables, and APA 7 formatting make up the remaining criteria.
Common HLTH 4383 Module 1 mistakes, and how to avoid them
Ratio papers most often go wrong by listing twelve ratios with a sentence each and no overall story. Pick the ratios that answer the question and explain what links them. Another frequent error is treating a healthy current ratio as proof of liquidity when most current assets are receivables. Students also forget to adjust for volume, so they call rising total costs inefficiency when the organization simply did more work. Check every calculation against the statements twice, and round consistently. Avoid recommendations that need information you never analyzed, such as a new service line in a paper about cash. If your module gives you a hospital, clinic or nursing home instead of a surgery center, send the statements and your rubric, and we will prepare a Module 1 analysis from those figures.
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HLTH 4383 Module 1 questions, answered
What does HLTH4383 Module 1 usually ask for?
HLTH4383 usually opens with financial statements: read a health organization's income statement, balance sheet and cash flows, calculate key ratios, compare them with targets or prior years and explain what they mean for management. Your classroom's instructions decide the organization.
How can a profitable health care organization run out of cash?
Profit is not cash. Money can be tied up in unpaid claims, spent on debt principal or equipment, or paid out to owners, so an organization with a positive margin can still see its cash fall.
How do you calculate days cash on hand?
Divide cash and short-term investments by daily cash operating expenses, which are total operating expenses minus depreciation, divided by 365.
Where can I find a free HLTH 4383 Module 1 sample paper?
On this page. The full Module 1 ratio analysis of an ambulatory surgery center is posted with its per-case figures, days cash, receivables, debt coverage and three recommendations, plus margin notes.
Which ratios should a health care financial analysis include?
Cover profitability, such as operating margin; liquidity, such as days cash on hand and the current ratio; activity, such as days in accounts receivable; and solvency, such as debt service coverage.