Week 4 Assignment _Avalon Health Care Organization Case Study (4)

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Ashford University - California *

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281 281

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Accounting

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Jan 9, 2024

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pdf

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1 Avalon Health Care Organization Case Study Kiahanna Miles The University of Arizona Global Campus ACC: 281 Accounting Concepts for Health Care Professionals Professor: Christine Holmes 12/4/23

2 Avalon Health Care Organization Case Study A successful organization with a solid reputation for providing high-quality care and patient safety can grow into a more expansive and superior healthcare system. Such an organization is always searching for failing or potentially bankrupt hospitals while working toward its expansion objectives. Additionally, healthcare organizations benefit greatly from merging with other organizations Damiani (2018). Nonetheless, important things must be done before the alliance, such as purchasing or merging with other companies. Numerous issues need to be addressed, including patient safety and high-quality care, organizational setbacks, financial revenue reviews, and issues that have arisen (Murray et al., 2019). This paper explores the key concerns, issues, and history of the XYZ Health Care Organization. It will also investigate accounting procedures, produce a visual aid, investigate ethical scenarios that may arise in the future, provide a well-informed viewpoint, and survey the strategic plans. Background of Case Study This case study indicates that Avalon Healthcare Organization plans to acquire XYZ Healthcare Organization and its operations. It has two hospitals in nearby cities. One of the hospitals has 150 beds, while the other has 100. In addition, Avalon Health Organization plans to purchase XYZ Health Organization because it is at risk of closure and bankruptcy, and the old office is understaffed. The community will be deprived of health services due to the layoff of more than 300 employees. Avalon Health Organization believes this acquisition and business will help them grow and attract more patients. Critical Issues The assessment conducted by the Avalon Health Care Organization reveals that Medicare and Medicaid insurance patients make up a large portion of the patient population. Notably, the two insurances have low reimbursement rates for medical costs. In addition to the

3 excessive percentage of profit, they have found a complaint regarding a protocol violation that may pose a risk of serious harm to patients, members, and visitors, as per Joint Commission guidelines. Considerable issues were discovered to violate the guidelines of the Joint Commission (JC), including imbalances in the patient-to-nurse ratio, the use of physical restraints on dementia patients, the inefficient management of medication, the high rate of medication errors, the unclean patient environment, the unethical use of medication constraints, and the use of whistleblowers by hospitals as a means of punishment. Furthermore, the hospitals' reforms to comply with JC standards have financially stressed the XYZ Health Care Organization. The Avalon Health Care Organization also found an elevated frequency of resignations and unfilled days off. Moreover, XYZ Health Care Organization has ceased marketing their companies and patient services to save money because of financial difficulties. Employees of XYZ Health Care Organization reported the most recent problem, which was that the CEO and Chief Financial Officers were unaware of management utilizations, which led to a decrease in Medicaid, private, and Medicare insurance earnings. Accounting Practices Analysis The Current Ratio Current Assets/Current Liabilities Period Current Ratio 12/31/20X0 2.13 12/31/20X1 1.71 12/31/20X2 1.12 Table 1

4 Quick Ratio Calculated as Current Assets less Inventory divided by Current Liabilities Period Quick Ratio 12/31/20X0 2.10 12/31/20X1 1.68 12/31/20X2 1.10 Table 2 Vertical Analysis 12/31/20X0 % Total Revenue 100 Cost of medical services 46 Gross profit 53 Operating expenses 28 Income before tax 25 Income taxes 0.05 Net income or (Loss) 0.20 12/31/20X1 % Total Revenue 100 Cost of medical services 48 Gross profit 51 Operating expenses 34

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