MMHS is a successful home health service company which has expanded constantly over the intervening 20 years, with further patient growth forecasted in 2012. The home healthcare business is seasonal with 66% of the entire annual sales occurring in the late Fall and Winter months. The evolving expansion of the agency and seasonality of the business makes cash management challenging for Ms. Ringer and has landed her in the predicament of requiring a loan to pay salaries. Aligning operating expenses to revenue, improving management of operating costs and decreasing the amount of cash in accounts receivable will improve her immediate cash flow crisis. For details see prior question.
2. To have access …show more content…
3. One source of MHHS’s cash flow problems are the steady staff salaries and benefits in the face of a seasonal industry. Ms. Ringer uses the promise of regular employment for full and part time staff as a recruitment tool, despite the variation in demand for home health services, which is higher in the winter months, but markedly decreased in summer. The seasonal nature of the home health industry, coupled with the steady labor expense, which she is actively expanding, requires Ms. Ringer to utilize a line of credit to cover her staff salaries, as they are not being covered by patient care.
It is also clear that the amount of money in
Menotomy 2 Essay1062 Words | 5 Pages
Another option is to maintain staffing at current levels, but to do away with benefits. This could lead to attrition but will immediately relieve the cash flow crisis. 5. Ms. Ringer needs to improve her contractual negotiations with the hospital. Menotomy Home Health agency appears to be a rather small agency with great capacity for growth. With respect to their billing it does not look as though they are capitalizing on their billing. While the information available for the case is limited with…