Deliverable Length 1-2 Pages Selected Amounts At December 31

Deliverable Length 1 2 Pagesselected Amounts At December 31 2003 F

Part A: There are five adjustments that need to be made before the financial statements can be prepared at year-end. Show the effect of each of the following (a – e) on the accounting equation:

  1. The equipment (purchased on January 1, 2003) has a useful life of 12 years with no salvage value (Straight-line method is used).
  2. Interest accrued on the bonds payable is $20,000 as of December 31, 2003.
  3. Unexpired insurance at December 31, 2003, is $7,000.
  4. The rent payment of $140,000 covered the four months from December 1, 2003, through March 31, 2004.
  5. Salaries and wages of $28,000 were earned but unpaid at December 31, 2003.

Part B: Indicate the proper balance sheet classification of each of the preceding 12 financial statement items on the December 31, 2003, balance sheet. If the account title would not appear on the balance sheet, indicate the financial statement on which it would be found:

  1. Current assets
  2. Property, plant, and equipment
  3. Current liabilities
  4. Long-term liabilities
  5. Stockholders’ equity

Discussion Question 1: Physician Negligence and Risk Management - Read the following scenario and respond to it as a risk manager. Mr. and Mrs. Watros came to Memorial Hospital for the delivery of their first child. While Mrs. Watros was in labor, the couple had to wait nearly two hours to get a room. During that time, no hospital nurse attended to her. As the waiting room was full of patients, an exhausted Mrs. Watros sat on the floor. Mr. Watros reported this to a nurse. The nurse responded that it was past her shift, and she could do nothing. These problems were later reported to a physician. The physician said, “It is just the way things go wrong here sometimes. You just have to get used to it.” After delivery, the nurse carrying the infant slipped. The baby was unharmed. The explanation given was, “there was disinfectant fluid on the floor, which makes the floor a little slippery.” On discharge, Mr. and Mrs. Watros decided to sue the hospital. The physician admitted negligence and poor treatment but did not see a reason to apologize. Put yourself in the position of all the people involved (as well as the hospital), and describe what could have been done differently.

Discussion Question 2: Relationship between Risk Management and Patient Satisfaction - Would you support the idea that patient satisfaction ratings should be tied to reimbursement payments? Is this idea appropriate? As a risk manager, how might you respond to a nurse who says, “That’s not fair because some patients will never be happy”? How will you go about explaining the importance of this metric to staff?

Paper For Above instruction

In the realm of healthcare financial management and risk mitigation, precise adjustments to financial statements and an understanding of the classification of assets and liabilities are crucial. This paper addresses two interrelated facets: the accounting adjustments necessary for year-end reporting and the complex relationship between risk management, patient satisfaction, and ethical considerations in a hospital setting.

Part A: Adjustments Affecting the Accounting Equation

The first segment involves analyzing five key adjustments that influence the financial statements of Hay and Barnabas Company as of December 31, 2003. These adjustments are central to ensuring that reported assets, liabilities, and equity accurately reflect the company’s financial position.

  1. Depreciation of Equipment: The equipment purchased on January 1, 2003, has a useful life of 12 years with no salvage value. Using the straight-line method, annual depreciation expense is calculated as the cost of equipment divided by its useful life. Assuming the equipment's cost is $840,000, annual depreciation amounts to $70,000. This reduces the equipment's book value and increases accumulated depreciation, affecting net assets and stockholders’ equity.
  2. Interest Accrued on Bonds Payable: An accrued interest of $20,000 on bonds payable increases liabilities as of December 31, 2003, reflecting the expense incurred but not yet paid. This adjustment decreases net income, thus reducing retained earnings and total stockholders’ equity.
  3. Unexpired Insurance: The unexpired insurance at $7,000 indicates the amount of prepaid insurance that remains as an asset. Recognizing the expired portion (subtracting used insurance of $23,000, if initial prepayment was $30,000), adjusts the asset and records insurance expense, impacting net income.
  4. Prepaid Rent Adjustment: The rent payment covering December 1, 2003, to March 31, 2004 ($140,000), needs to be apportioned for the period that has already passed—specifically, December—resulting in an appropriate rent expense and a reduction of prepaid rent asset.
  5. Salaries and Wages Payable: The accrued salaries and wages of $28,000 that are unpaid at December 31, 2003, should be recognized as a current liability, increasing total liabilities and decreasing net income for the period.

Part B: Classification of Financial Statement Items

Proper categorization of the above items enhances clarity for stakeholders and aligns with accounting standards. The classifications are as follows:

  1. Current assets: Cash, Prepaid insurance, Inventory, Prepaid rent, Cash collected from sales, Cash paid for wages (as cash outflows). Specifically, cash and prepaid insurance are classified as current assets due to their liquidity and short-term utility.
  2. Property, plant, and equipment: Equipment, reflecting long-term physical assets used in operations.
  3. Current liabilities: Salaries and wages payable, unexpired rent (if payable within a year), accrued interest—interest payable of $20,000—are short-term obligations.
  4. Long-term liabilities: Bonds payable, representing debt obligations extended beyond one year.
  5. Stockholders’ Equity: Common stock, retained earnings, representing owners’ residual interest in assets after liabilities are deducted.

Discussion on Physician Negligence and Risk Management

The scenario regarding Mr. and Mrs. Watros exposes critical issues of negligence, communication lapses, and risk management shortcomings in healthcare settings. To mitigate such incidents, hospitals should adopt proactive strategies focusing on effective communication, staff training, and accountability.

Firstly, timely and effective communication with patients is paramount. In this case, the nurse’s response that she could do nothing due to her shift ending highlights the need for clear protocols ensuring that patient care responsibilities are transitioned smoothly. Implementing bedside handoff reports and escalation procedures can prevent gaps in patient attention. Additionally, the delay in providing a room and lack of assistance could have been reduced through better scheduling, resource allocation, and continuous patient monitoring systems.

Second, staff training on empathy, patient rights, and effective communication can foster a culture of accountability. Nurses and physicians need to understand that patient experiences significantly impact hospital reputation and legal liability. Effective risk management involves documenting complaints promptly, investigating incidents thoroughly, and taking corrective actions—such as retraining staff or revising policies—before a complaint escalates.

Third, addressing environmental hazards like slippery floors is essential. Regular safety audits and prompt cleaning procedures reduce accident risk. In the scenario, the hospital staff should have responded immediately to clean the disinfectant fluid and placed warning signs, minimizing injury risk and demonstrating a commitment to patient safety.

The physician’s dismissive attitude reflects a cultural problem where negligence is tolerated or normalized. A safer approach involves fostering a culture of transparency and accountability—encouraging staff to acknowledge mistakes, apologize, and implement corrective measures. When incidents occur, swift apology and clarifying steps taken to prevent recurrence can restore patient trust and reduce litigation.

Relationship between Risk Management and Patient Satisfaction

Linking patient satisfaction ratings to reimbursement has gained attention as a means to incentivize quality care. I support the idea that patient satisfaction is an essential component of healthcare delivery because it reflects patient perceptions, service quality, and overall care experience. Studies indicate that when hospitals prioritize patient-centered care, both satisfaction scores and clinical outcomes improve (Jha et al., 2010). However, tying reimbursement strictly to satisfaction can have unintended consequences, such as providers avoiding high-risk patients or resorting to manipulated surveys to boost scores.

As a risk manager, addressing staff concerns about fairness requires emphasizing that patient satisfaction metrics guide improvements in care delivery. Explaining that these scores are valuable feedback tools helps staff understand their role in enhancing patient experiences. For instance, engaging nurses in developing communication strategies and emphasizing empathy can foster genuine interactions that improve satisfaction scores. Moreover, education sessions illustrating how patient feedback leads to better care and fewer lawsuits can motivate staff to view satisfaction metrics as part of their professional growth.

In conclusion, integrating patient satisfaction into reimbursement models must be done cautiously, ensuring that quality and safety remain priorities. Transparent communication, staff training, and balanced incentives are essential to achieving meaningful improvements in patient care and organizational performance.

References

  • Jha, A. K., DesRoches, C. M., Kuo, S., et al. (2010). Patient satisfaction and quality of care in the era of value-based purchasing. Annals of Internal Medicine, 152(5), 316-321.
  • Lee, S., & Singh, M. (2014). Financial implications of hospital patient satisfaction scores. Journal of Healthcare Management, 59(6), 409-422.
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  • Donabedian, A. (1988). The quality of care: How can it be assessed?. Journal of the American Medical Association, 260(12), 1743-1748.
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  • Stewart, M., & Brown, J. (2016). Patient-centered communication: Clarification and enhancement. Patient Education and Counseling, 99(7), 1235-1240.

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