Critical Thinking

The company’s revenues are largely tied to one key group of customers – insurance companies. Almost all of a hospital’s income comes from insurance companies with the largest payers being Medicare and Medicaid. Should a hospital lose one of these primary payers, they would lose a large portion of their income putting the hospital in a critical position as a company.

Currently the clinic sees about 45 patients per day and they have capacity to handle 85. If they continue how they are operating the clinic is looking at a loss of $3,173. At this rate the clinic will not be able to make a profit in spite of inflation over the next couple years.

2. In the 21st century exposure to media is an everyday event for most of us. Even at the grocery store, we see magazines and newspapers with eye-catching headings that may not be true. Also, the news is everywhere, and with technology on the rise, we even get news alerts on our phones. The media has taken over society. Most of the stories we read about seem to be true but in reality, are they giving a true insight of what is actually happening? Some of the stories cause people to become blindfolded from reality. This is because the stories that people read or see have a profound impact on shaping our reality rather they are true or not. We see the news about events that are going on in the world; rather they are catastrophic events or devastating events that were done by humans.

To add to the dilemma, the rising cost of healthcare will not adequately be addressed by any new healthcare system. The costs of healthcare in America are staggering and currently represent over 17% of our national GDP with the expectation of that number rising to 20% in less than 5 years. These costs are direct hits on the revenues received by hospital which affect their ability to remain operational. As the hospital’s revenues and profit margin decrease, so does the expected longevity of the hospital.

Not to mention, if the hospital was to lose too much revenue, it might have enough impact to actually shut the hospital

FirstHealth Moore Regional Hospital is working on renovations to their hospital. The county has seen growth in the community and with golf tourism to their county in the past few years. To develop the revenue enough to generate a definite bottom line; FirstHealth wanted the county commissioners and the community to support the renovations with the renewal of the ending annual $4.6 million tax support, which outlined about 15 percent of costs. Developing the project a financial transaction group of members developed forecast revenue that involved profit increase from the new physicians, increase from clinical services, and advantages of expense based reimbursement of a CAH. The forecast indicated FirstHealth’s debt expanse of $41 million, FirstHealth would be able to finance the whole expense of the renovation, while depending upon using their own money to retire the $3.3 million of remaining debt. A plan was generated for the renovation project that was inside the $41 million budget. Securing the financing, convincing the county commissioners, and gaining the community support are the three sources of revenue that will assist FirstHealth Moore Regional Hospital in the financial forecasting.

The nurses, which have the highest turnover rate will be the on the top of the list, losing 40 employees in their department. It is a very demanding job, with high salaries, and perhaps the ones most subject to turnover. Also to mention, around 67% of the department received ratings of as either “low performance” or “meets the requirement.” Next on the chart, the Allied Health department will be losing 15 of their staff. It is due to the fact of the department’s high turnover rate and low performance appraisals. Next, on the Central Administration department, the layoff of 25 employees would be necessary in order to achieve a good deficit cut. In particular of this department, for the first time, the salary average will be taken into consideration. The department has one of the biggest salary averages of the hospital, which is around $40,000 per person. Also, since it is a hospital, the department is not “vital” for its existence. The doctors and nurses are the key members of a hospital and reducing administrative staff seems a good alternative in this situation. Next on the

The cost of the health care industry has always been rising since the early 1980s. It has been a growing concern in both the industry and society. Massachusetts General Hospital (MGH) is no exception. Even though the average length of stay (LOS) for the patients in MGH has been declining (Exhibit 10), it is still the highest compared to their competitors (Exhibit 6). Besides the cost, there is no uniformity of process and standardization across different facilities and departments of the hospital. MGH lacks communication and coordination between the facilities.

Though they are not entirely comprehensive tools, a great deal can be learned about a hospital or other healthcare organization for-profit or not-for-profit from an examination of their annual financial documents (Finkler & Ward, 2006). The balance sheet and statement of revenue and expense can both yield valuable clues even in the absence of other evidence about changes that might be occurring in the organization, a definition of the type and degree of certain problems that it might be facing, and potential opportunities for improvement in performance that might exist (Finkler & Ward, 2006). Comparing two or more years' worth of financial information yields even more valuable insights, tracking movement in the hospital or other organization's ability to finance its activities and thus continue providing services at the same level, quantity, and scope as current operation.

As a not-for-profit hospital, our focus and charitable mission is on providing reasonably priced care to all patients who approach us, including the indigent population who make up a majority of our patient base at Metropolitan’s pre-natal and well-baby community clinic. Our positive public relations will encourage community support, loyalty and ownership in Metropolitan based on its quality, safety and service efforts. Strategy A actively promotes and informs the community about our available services and maintains our reputation. Wellness promotion initiatives through appropriate lifestyle choices and help address social factors negatively impacting our community 's health and provide education in chronic disease management will help improve our communities’ needs identified in the CHNA.

There are many financial ratios used in evaluation of a healthcare organization’s performance but for purpose of this study, it will be limited to activity, leverage investment, liquidity and profitability.

Additionally, the unwillingness of the business office employees to accept onsite help from the hospital financial analyst team. They appear to be content with the status quo, which has resulted in their current financially precarious situation. They do not have the foundation needed, which should be as described by Weiss, Hassell, and Parks (2013) “…fertile enough to accept the seeds of change and to nurture them to grow” (p. 492).

The financial statement analysis of Doctors Hospital raises hopes and concerns regarding the financial performance and financial situation of the hospital. A rise in net assets and drop in liabilities will support the financial base of the hospital. Profits from short-term I nvestments should maintain this base, and improve the total assets. There is a concern in regards to cash flow and net income. There is a large reduction in cash flow of $2,222,000, which means there might be a shortage in cash flow to continue the project or purchase capital equipment. The organization should have to find solutions like to borrow from banks, spreading payments in future, etc. to manage the shortage of cash flow (Finkler et al., 2013). Another area

The problem at Memorial Hospital is the focus on costs instead of health care. When a health care provider does not take the primary business as the core value of the operation and make strategic and tactical decisions based primary on costs, it decreases the consumers’ (patients) satisfaction in long run. As consumers reduce or stop purchasing goods and services from the hospital, hospital may make more cost oriented decisions and falls into a negative cycle. Eventually the hospital may face the fate of loosing business to competitors and the possibility of closing the door.

Blake Memorial Hospital was already in a huge debt and Reid could only borrow a certain amount since the hospital had to pay its previous debt, so Reid thought of cutting down the costs. He also thought closing down the clinics would give a great boost to the financial condition of Blake Memorial leading to provide better quality of care for the patients. But there was a debate about closing the clinics because the director of clinics of Blake Dr. Susan Russell didn’t want the clinics to shut down. She argued that the patients that visit the clinics they wouldn’t visit the hospital even if they were getting free transportation provided. Reid was confused about how he should improve the quality of care and manage the financial records of his hospital that was in charge of. He asked Dr. Russells to send him the report of clinics records to see what kind of patients come in and for what services.