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Case study of hospital merger
Case study of hospital merger
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The following document is the financial analysis with financial proposals to move Creekside Community Hospital into a strong economic future. To determine the best financial practices for Creekside Community Hospital, many factors were considered. This analysis starts with an evaluation of current capital structure and the organization’s liquidity and profitability ratios while offering recommendations to improve Creekside Community Hospital’s current financial standing. Looking at Creekside Community Hospital’s debt ratio, its current standing of 40.90 percent is below the industry median of 48.40 percent (Appendix). This indicates Creekside Community Hospital’s investments are falling short of the industry median. Fortunately for Creekside Community Hospital there are several ways of improving the debt ratio. In anticipation of a decrease in payments by government and insurance agencies, Creekside Community Hospital may want to consider merging with another healthcare organization to increase investment and funding opportunities. In merging with another organization, Creekside Community Hospital can become more competitive with other larger organizations by having shared resources (Jarvis, 2013). Shared resources will not only increase the investment …show more content…
Once change is that advance refunding is no longer available. Advance refunding allowed organizations to refinance a debt before a standard set period without penalties (Arduino, n.d.). For Creekside Community Hospital to improve its debt ratio, it will need to find ways of remaining flexible. In making investments, Creekside Community Hospital will want to look for funding with the language indicating the organization has flexibility at the time of interest rate reset. In doing so, this will allow the organization and lender to make mutual changes, such as interest rate set and negotiates the interest rate (Arduino,
In this case, the reader learns that liquidity is a better than average. The ratio and cash on hand have been better than 2013 from the past years. Moreover, it shows that the hospital has a higher ability to meet its cash obligation because it has more security compared to other hospitals. Funding allows hospitals to control funds and limit investments. Not-for-profit organizations help provide more services and margin of safety. Therefore, creditors look for a margin of safety so that the community that financed a small portion of total financing can be returned to the owners by leveraging. Capitalization ratio measures the funds that were borrowed and the assets that have been used. The coverage ratio measures the number that time they fixed financial charges. The time's interest earned ratio shows the ability of the hospital to meet
1. I am asked to compute the before-tax Net Present Value or NPV of a new ski lift for Deer Valley Lodge and advise the management there of the profitability. Before I am able to make this calculation there are a few calculations that I will need to make first. First the total amount of the investment, this will be the cost of a lift itself $2 million plus the cost of preparing the slope and installing the lift $1.3 million.
Strengths Long-standing reputation Provision of quality healthcare Highest rank in patient satisfaction Recipient of Joint Commission accreditation Serving a diverse population Weaknesses Smaller than other four hospitals Decrease in net profit Increase in expenses Significant increase in long-term debt Not-for-profit status Opportunities Changes in government regulations Change in lifestyle Influx of patients due to higher patient satisfaction Cost savings Opening of some outpatient clinics and surgery centers Threats Too much competition
To guarantee that its members receive appropriate, high level quality care in a cost-effective manner, each managed care organization (MCO) tailors its networks according to the characteristics of the providers, consumers, and competitors in a specific market. Other considerations for creating the network are the managed care organization's own goals for quality, accessibility, cost savings, and member satisfaction. Strategic planning for networks is a continuing process. In addition to an initial evaluation of its markets and goals, the managed care organization must periodically reevaluate its target markets and objectives. After reviewing the markets, then the organization must modify its network strategies accordingly to remain competitive in the rapidly changing healthcare industry. Coventry Health Care, Inc and its affiliated companies recognize the importance of developing and managing an adequate network of qualified providers to serve the need of customers and enrolled members (Coventry Health Care Intranet, Creasy and Spath, http://cvtynet/ ). "A central goal of managed care is containing the costs of delivering care, but the wide variety of organizations typically lumped together under the umbrella of managed care pursue this goal using combination of numerous strategies that vary from market to market and from organization to organization" (Baker , 2000, p.2).
The board of trustees or directors, the community (if they have a say on the matter), and the employee union might influence the decision. If the financial difficulty is really severe, HSO might consider merging with another hospital in the area, if the other hospital is also struggling financially with their pediatrics unit or if the other hospital is ‘larger’. In both cases, the result will be more efficiency. This will be advantageous to my hospital and my hospital’s patients, for the bigger hospital might be better-equipped technologically. The merge itself does not need to be absolute; it does not require a complete consolidation of the other units/services. For example, it might be planned that the pediatrics services will be provided
First, let us analyze General Practice Affiliates’ current financial position. The income and expenses report shows a net revenue of $230,250. The net revenue is obtained after expenses, including taxes, of the company have been subtracted from revenue (Paterson, 2014, p. 124). The balance sheet shows a $306,180 in retained earnings. Retained earnings represent stakeholders’ equity (Paterson, 2014, p. 128). Retained earnings are usually invested back in the form of inventory or debt payments (Albrecht, Stice, Stice , & Swain, 2008). General Practice Affiliates’ cash flow analysis shows that the practice invests in new equipment. However, General Practice Affiliates mainly used cash during 2012. The main source of cash from operations came from depreciation expense, which is not a reliable source of funding (Paterson, 2014, p. 130). Accounts receivable increased by $50,000, while accounts payable only increased by $10,000. In addition, cash flow analysis shows a balance sheet data that is affected by future transactions (Paterson, 2014, p. 128). General Practice Affiliates choose to stretch the time to pay suppliers instead of paying its bills. ...
It is obvious that there is a large gap between where Coastal Medical Center is and where they need and want to be. When comparing CMC’s competitors, Johnson Medical Center and Lutheran Medical Center, CMC needs to provide more efficient, high quality care and focus on more profitable priorities instead of funding multiple unsuccessful projects such as the fifty-three unfinished developments.
The ability of a unit to survive is largely dependent upon the hospitals internal financial budgetary performance and the external needs within the community. Developing a financial budget is a process that should use teamwork to plan and implement in order to be effective. The budget sets perimeters for administrators to follow throughout the year, allowing the director to report variances while providing guidance to maintain a minimum variance and adjust when possible (Finkler & McHugh, 2008). By using all department managers in the planning process of the new budget, the nurse executive is able to develop effective strategies for all departments while investing in the goals. This eliminates many problems associated with budget and identifies areas that need improvement or expansion. Because of the competition, declining margins, and other economic pressures, nurse executives need to take steps to control costs and increase revenues for this unit. The overall goal of the financial performance within the organization is to meet the total budgetary needs of the unit to produce favorable outcomes. My focus will be to propose the expansion of a new Joint Replacement Unit (JRU) within the hospital, while identifying the major operating components of the budget for this organization. The importance of reviewing the budget for a newly developed unit is to allow the nurse executive and administrative team to manage the existing organizational programs within in the facility, plan for goal accomplishments for the new unit, while controlling costs.
A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate clinical and managerial interventions.
The CareGroup Case Study comprises various components. The core concepts were broken down into the history of CareGroup itself, CareGroup’s IT, the collapse of the network, dealing with the collapse of the network, and the lessons learned from the entire situation (McFarlan, F. Warren, and Robert D. Austin, pg.1). CareGroup was formed on the basis of three major Massachusetts hospitals; Beth Israel, Deaconess, and Mount Auburn (McFarlan, F. Warren, and Robert D. Austin, pg.1). After a surprising merger of Mass General and Brigham and Women’s Hospital, all three hospitals in CareGroup suffered great financial losses (McFarlan, F. Warren, and Robert D. Austin, pg.2). Due to the multi-million dollar financial losses, CareGroup felt they needed a change, which is when they added Halamka to their team, naming him their CIO (McFarlan, F. Warren, and Robert D. Austin, pg.3).
The increase in debt ratio has attracted the attention of rating agencies who have clearly stated that in order for HCA to maintain their A bond rating, HCA must return to their 60-40 capital structure. Now the question arises as to whether the A rating should be sought or should HCA move to a less conservative position. Some investors believe that a more aggressive use of leverage would present greater opportunities in the future. Others feel that with changes in the Medicare/Medicaid reimbursement structure on the horizon, HCA should remain conservative. In order to decrease the debt ratio, HCA would have to 1) decrease the growth rate (inadvertently decreasing ROE) or 2) decrease debt/increase equity.
That will also apply to Ex-ante analysis. The center will not be able to implement strategies and ideas for future movements in price or the future impact of a newly implemented policy. For example, if Bayview Surgery Center perform higher number of surgeries on the following year. The revenue generated from overcharging the insurance companies will also increase the profit. As a result, it will be hard to evaluate the implemented strategies since we won’t be able to interpret the revenue increase accurately.
Trinity Community Hospital community health assessment needs was obtained from input the hospital CEO and senior management obtained input from medical staff members and community leaders to develop a vision for the hospital. A five-year plan identified orthopedic, oncology and cardiology services needed to be developed in order to better serve the community needs. A five-year targeted outcome for these services was outlined along with the level of capital investment required to develop these services. Lastly, financial analysis was conducted to determine if sufficient margin will be generated for future growth. A detail analysis of orthopedic service line is included in this paper to determine the feasibility of the proposed service line.
WellStar Health Systems is currently the preeminent and largest health care provider in Metro Atlanta. WellStar Health Systems is a not-for-profit institution that is composed of 5 hospitals and an abundance of physician groups. Physician specialty groups included within WellStar are: ENT, Psychiatry, Endocrinology, Pulmonary Medicine, Infectious Disease, General Surgery, Rehabilitation, Pathology, and Rheumatology. WellStar’s organizational design is composed of internal and external factors that define the organization’s size, organizational structure, and processes. Internal and external factors are the basis for influencing managerial conclusions in decision-making. These factors vary from organization to organization and are the rationale for understanding WellStar’s strengths, weaknesses, opportunities, and threats. Understanding these variables is a necessity for the sake of WellStar’s survival
...provide information about an organizational financial stability and challenges. A health care organization, such as JHH, can evaluate financial statements and ratio analysis to benchmark performance, address financial challenges and initiate strategies to maintain financial solvency while providing health services to patients, family members, and the community