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. 2024 Jul 2;12(7):e5861.
doi: 10.1097/GOX.0000000000005861. eCollection 2024 Jul.

The Importance of Financial Statements in Clinical Practice

Rajiv Chandawarkar  1 , Prakash Nadkarni  2 , Elizabeth Barmash  1 , Allison Capek  1 , Kathleen Casey  1
Affiliations

The Importance of Financial Statements in Clinical Practice

Rajiv Chandawarkar et al. Plast Reconstr Surg Glob Open. .

Abstract

Background: Financial statements provide vital information to department chiefs and hospital leadership alike. They reflect departmental performance and guide critical financial decisions for their teams. However, financial statements can be inherently difficult to read and interpret and require time and attention, understandably challenging for busy clinicians.

Methods: Here, we aimed to demystify the several types of financial statements, including profit and loss statements, balance sheets, and cash flow statements, and explain what they reveal (and ignore). We describe key performance indicators based on these statements that are routinely used by hospital administrations. This work targets clinicians, team leaders, academic faculty, and administrators alike, recognizing that all of them share the same goals.

Results: Mastering the basics of financial statements and using the information within them creates a healthier clinical practice. In turn, it enhances provider satisfaction and enables the team to deliver patient care without financial anxiety.

Conclusions: Understanding financial statements helps shared decision-making between clinicians and their administrators-strengthening partnerships that synergistically drive revenue, profitability, and growth.

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Conflict of interest statement

The authors have no financial interest to declare in relation to the content of this article.

Figures

Fig. 1.
Fig. 1.
ABC Plastic Surgery LLC P&L statement (aka income statement).
Fig. 2.
Fig. 2.
ABC Plastic Surgery LLC balance sheet (note the importance of the date).
Fig. 3.
Fig. 3.
ABC Plastic Surgery LLC CFS.
Fig. 4.
Fig. 4.
How the three FSs provide different facets of clinical performance.
Fig. 5.
Fig. 5.
Interaction of the three FSs reveals vital performance data.
Fig. 6.
Fig. 6.
Sample comparison between two departments of plastic surgery at the University of Griffindor and Slytherin.
See this image and copyright information in PMC

References

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