This is assignment 1 that assignment 2 have to relate to. PLEASE..docx
- 1. This is assignment 1 that assignment 2 have to relate to. PLEASE. Financial Statement Analysis Student name University Professor October 25, 2016 Financial Statement Analysis Based on your review of the financial statements, suggest a key insight about the financial health of the company. Speculate on the likely reaction to the financial statements from various stakeholder groups (employee, investors, shareholders). Provide support for your rationale. Health Management Associates, Inc. (NYSE: HMA) is the operator and owner-general acute care centers in the non-urban
- 2. communities situated in the US, particularly in the Southwest. The organization was founded in 1977. The hospitals provide services such as oncology, emergency room care, general surgery, internal medicine, radiology, pediatric services, coronary care, and diagnostic care ( www.healthcaremanagement.com ).The company is also providing outpatient services like x-ray, respiratory therapy, one-day surgery, laboratory services, physical therapy as well as cardiology therapy. The mission of the Health Management is to provide America’s best local healthcare. They provide processes, capital finance, expertise, and people that can ensure that the local hospitals can accomplish their mission of delivering compassionate and high- quality healthcare that would substantially improve the lives of patients, the communities they serve, and the physicians providing the care www.healthcaremanagement.com ) With regard to the review of the current financial statement, HMA is in a dangerous financial state as a result of the present increasing debts and legal woes. The Office of the Inspector General, Justice Department, and the Department of Health and Human Services served the organization with summons regarding a software program that was used by ED doctors and the records from the emergency department. Some reports suggested that there was pressure from the company’s hospitals management to admit patients from emergency rooms so as to maximize profits. Paul Meyer, former compliance director, claimed that HMA’s fraudulent activities could attract government investigation (Britt, 2012). The common stock of Health Management Associates was owned by almost 850 shareholders, as per the records of December 31, 2012, with hundreds of institutional investors included. HMA had expanded to include 70 hospitals situated in
- 3. 15 states, with roughly 10,562 present licensed beds. In 2012, HMA realized about $5.9 billion in net revenue (Britt, 2012). HMA gets payments for the services it renders from the federal government through the Medicare program, the states in which it functions under each Medicaid program, and commercial insurance, among others; and patients, encompassing deductibles and co-payments. Basically, deductibles and co- payments are part of the bill of patients for the medical services provided, which many government and private payers expect the patient to cater for. The amount of deductibles and co-payments varies depending on the provisions of the health plan in which the patient is participating. The company is currently collecting approximately 50-55% of the co-payments and deductible amounts. In the recent years, efforts have been increased to collect the deductible and co-payments amounts at the same time when services are provided. These payments are subject to the same collection practices as done with other patients’ accounts receivables. Identify the current industry trend that has the most significant impact on your chosen organization’s financial performance. Indicate the trend’s impact on the financial performance of the organization. As the CFO, suggest at least one (1) way that you might minimize the impact of the trend on the organization. Declining hospital admissions is the current trend that impacts the financial performance of HMA. Many patients have opted to withdraw or delay elective procedures and surgeries. As a result of the 2007 recession, many people lost their health insurance due to job losses and the decreasing employer-based healthcare coverage benefits. This included in the mix, the increasing number of uninsured patients, bad debts, uncollectible revenues, and radical reduction of federal funding that many hospitals depended on. As the CFO, we intend to increase revenue at our hospitals through the provision of quality healthcare (Ginter,
- 4. Swayne, & Duncan, 2002). As a result, admissions, emergency room visits, surgical volume, and outpatient visits will increase. The hospitals are directed and administered at the local level by the chief executive officer. Well, one of the crucial elements of our strategy is to develop and maintain a cooperative association with our physicians and care providers. We would maintain a physician recruitment and development program which is designed to entice and retain qualified primary care physicians and specialists, in conjunction with our present community and physician needs, to expand the services provided by the hospitals. In order to end this trend of few admissions being realised in the hospitals, we also intend to create a special program that is designed to develop attractive practice opportunities for qualified physicians in the regions that our hospitals serve so as to develop outstanding medical staff, improve the retention and satisfaction of the primary care providers and the physicians, and also develop practise models which are sustainable in the competitive healthcare environment (Longest, Rakich & Darr, 2000). As the CFO, suggest one (1) key strategy that you might use to improve the financial performance of the organization. Recommend an approach to implementing the suggested strategy. Provide support for your recommendation. As the CFO, I believe that forming a merger with Community Health Systems is a good step to ensuring that financial performance of the organization is improved. The merger would serve as an optimal time for the new organization to develop a culture of openness, learning, support, and improvement to ensure its financial survival. It would be my responsibility to cooperate with the senior management to create and implement effective internal control initiatives which will encompass authorization, ethical leadership, and oversight within the
- 5. organization. Transparency must be instilled in the organization with regard to procedures and policies to develop trust among the employees and other stakeholders. Leaders have the responsibility of leading by positive example; setting the way to be followed, demonstrate confidence, and being accountable (Ginter, Swayne & Duncan, 2002). Such an environment will be a point of motivation for the physicians. As a result, they will provide quality services to the patients. This will attract more patients to come in for medical attention hence increasing revenue collection. References About us: Health Management Associates. Retrieved October 21, 2016 from http://www.healthmanagement.com/ Britt, R (2012, December 3). HMA feels fallout from “60 Minutes” story. The Wall Street Journal. Ginter, P., Swayne, L., & Duncan, W. (2002).
- 6. Strategic Management of Health-Care Organizations (4th Ed.). Malden, MA: Blackwell. Longest, B., Rakich, J. & Darr, K. (2000). Managing Health Services Organizations & Systems . Baltimore: Health Professions Press. THESE ARE THE INSTRUCTIONS FOR ASSIGNMENT 2 Assignment 2: Using Financial Ratios to Assess Organizational Performance Due Week 6 and worth 240 points Using the financial statements from your selected health care organization in Assignment 1, develop a financial plan for the next three (3) years. Write a four to five (4-5) page paper in which you: Suggest the financial ratio that most financial analysts would use to evaluate the financial condition of the company. Provide support for your rationale. Speculate on the organization's ability to meet its financial obligations as they come due. Provide support for your rationale. Based on your ratio analysis, determine whether the profitability trends are favorable or unfavorable and explain your rationale. Using financial ratio analysis, predict whether or not the company will be viable in five (5) years based on its performance over the past three (3) years. Provide support for your prediction. Use at least two (2) quality academic resources. Note: Wikipedia and other Websites do not qualify as academic resources. Your assignment must follow these formatting requirements: Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references
- 7. must follow APA or school-specific format. Check with your professor for any additional instructions. Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length. The specific course learning outcomes associated with this assignment are: Evaluate the financial statements and the financial position of health care institutions. Describe the overall planning process and the key components of the financial plan. Use technology and information resources to research issues in health financial management. Write clearly and concisely about health financial management using proper writing mechanics. Grading for this assignment will be based on answer quality, logic / organization of the paper, and language and writing skills, using the following rubric. Points: 240 Assignment 2: Using Financial Ratios to Assess Organizational Performance Criteria Unacceptable Below 70% F Fair 70-79% C Proficient 80-89% B Exemplary 90-100% A 1. Suggest the financial ratio that most financial analysts would use to evaluate the financial condition of the company. Provide support for your rationale. Weight: 20%
- 8. Did not submit or incompletely suggested the financial ratio that most financial analysts would use to evaluate the financial condition of the company. Did not submit or incompletely provided support for your rationale. Partially suggested the financial ratio that most financial analysts would use to evaluate the financial condition of the company. Partially provided support for your rationale. Satisfactorily suggested the financial ratio that most financial analysts would use to evaluate the financial condition of the company. Satisfactorily provided support for your rationale. Thoroughly suggested the financial ratio that most financial analysts would use to evaluate the financial condition of the company. Thoroughly provided support for your rationale. 2. Speculate on the organization's ability to meet its financial obligations as they come due. Provide support for your rationale. Weight: 20% Did not submit or incompletely speculated on the organization's ability to meet its financial obligations as they come due. Did not submit or incompletely provided support for your rationale. Partially speculated on the organization's ability to meet its financial obligations as they come due. Partially provided support for your rationale. Satisfactorily speculated on the organization's ability to meet its financial obligations as they come due. Satisfactorily provided support for your rationale. Thoroughly speculated on the organization's ability to meet its financial obligations as they come due. Thoroughly provided support for your rationale. 3. Based on your ratio analysis, determine whether the
- 9. profitability trends are favorable or unfavorable and explain your rationale. Weight: 20% Did not submit or incompletely determined whether the profitability trends are favorable or unfavorable and did not submit or incompletely explained your rationale. Partially determined whether the profitability trends are favorable or unfavorable and partially explained your rationale. Satisfactorily determined whether the profitability trends are favorable or unfavorable and satisfactorily explained your rationale. Thoroughly determined whether the profitability trends are favorable or unfavorable and thoroughly explained your rationale. 4. Using financial ratio analysis, predict whether or not the company will be viable in five (5) years based on its performance over the past three (3) years. Provide support for your prediction. Weight: 25% Did not submit or incompletely predicted whether or not the company will be viable in five (5) years based on its performance over the past three (3) years. Did not submit or incompletely provided support for your prediction. Partially predicted whether or not the company will be viable in five (5) years based on its performance over the past three (3) years. Partially provided support for your prediction. Satisfactorily predicted whether or not the company will be viable in five (5) years based on its performance over the past three (3) years. Satisfactorily provided support for your prediction. Thoroughly predicted whether or not the company will be viable in five (5) years based on its performance over the past three (3) years. Thoroughly provided support for your prediction.
- 10. 5. 2 references Weight: 5% No references provided Does not meet the required number of references; some or all references poor quality choices. Meets number of required references; all references high quality choices. Exceeds number of required references; all references high quality choices. 6. Clarity, writing mechanics, and formatting requirements Weight: 10% More than 6 errors present 5-6 errors present 3-4 errors present 0-2 errors present