Samples Finance Gathering Financial Information and Analysis

Gathering Financial Information and Analysis

490 words 2 page(s)

Hospitals are classified as not-for-profit or for-profit. There are key differences in how the two different business classifications set up their financial statements for reporting and analysis purposes. Fundamental differences exist in terms of mission, revenue classification, and taxation. Variations can be explored in the balance sheet, income statement, and statement of cash flows between the two different business classifications.

Community Health Systems (CHS) Inc. is a one of the nation’s largest health systems. According to Business Wire (2011) “the organization’s affiliates own, operate or lease 126 hospitals in 29 states, with an aggregate of approximately 19,400 licensed beds…Through its subsidiary Quorum Health Resources, LLC, the company also provides management and consulting services to approximately 150 independent non-affiliated hospitals located throughout the United States.” Community Health System reports on their income statement total revenues of over $13 Billion, gross profit of $11.05 Billion, operating expenses of $9.85 Billion, and a tax rate of 31.26% (MSN Money, 2013).

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The financial documents for Children’s Healthcare of Atlanta were reviewed and compared to the for-profit CHS. Children’s Healthcare of Atlanta Inc. reports annual revenues of over $416 million with total expenses of over $349 million (Guidestar, 2013). According to the Medicare News Group (2013) “A nonprofit hospital does not pay either state or local property taxes or federal income taxes because it is considered a charity, and proves certain community benefits in accord with state and federal guidelines.” Nonprofit hospitals are not publicly traded and do not have to comply with the Securities and Exchange Commission reporting format and guidelines. A for-profit hospital is owned by shareholders and is part of a business entity that issues shares of stock to raise capital and expand investments. Shareholder regulation creates an environment where different rules apply to companies that issue stock. These regulations do not apply to nonprofit agencies.

A key revenue reporting difference between CHS and Children’s Healthcare is the nonprofit organization has revenue associated with significant levels of donation. This supports the idea that nonprofits are greatly supported by society. There is also a difference in the reporting format of the balance sheet in the section of stockholder’s equity in the for profit report. Nonprofits have no owners and do not have this reporting requirement. A fundamental mission discrepancy is that nonprofits use financial reports to ensure that revenues exceed expenses in order to continue offering a social service while for-profits use financial reports to ensure profitability to shareholders while providing a service. Taxation is another key reporting difference as nonprofits do not have taxable income while for-profits are taxed.

  • Business Wire. (2011). “Leading U.S. Hospital Companies and Hospital Systems Invest in Healthcare Innovation Fund”. Retrieved on August 31, 2013 from,
  • Guidestar. (2013). “Children’s Healthcare of Atlanta: 2009 Form 990”. Retrieved on August 31, 2013 from,
  • Medicare News Group. (2013) “Medicare FAQs”. The medicare newsgroup. Retrieved on August 31, 2013 from,
  • MSN Money. (2013). “Community Health Systems Inc”. Retrieved on August 31, 2013 from,