Health Care Organizations Essay

Suggest the key financial drivers that most likely will cause health care organizations to merge. Provide support for your rationale. Cost is the driver that will most likely cause healthcare organizations to merge. Most healthcare organizations have issues with spending. Most industries today are faced with a variety of obstacles in achieving or remaining profitable. The healthcare industry is no exception. Profitability is enough of a challenge under normal circumstances, but especially so during fragile economic times. Uncertain revenue streams and rising costs have many healthcare organizations understandably apprehensive.

Traditionally, hospitals were more focused on managing revenues rather than on costs to insure profitability. But this focus on revenues has become increasingly more difficult to plan, execute and manage due to confusing healthcare reform, complex insurance reimbursements, community perception, government red tape and political concerns. Conversely, cost management has been a topic of discussion for the past decade but has not been a priority due to limited administrative resources.

Assuming that two (2) health care organizations have merged. Determine the evaluation criteria that a financial analyst would use to evaluate the financial performance of the organization post-merger, and identify the determinants that the analyst would use to decide whether or not the merger generated favorable financial results for the organization. Provide support for your evaluation. Financial ratio exposes the position of the business in terms of performance and efficiency of operation. They show whether the management are efficient or inefficient in their utilization of resources such as capital assets, labor etc. The degree of leverage of a company is ascertained from financial ratio analysis and this will enable stockholders and other suppliers of capital known the degree of gearing in a healthcare’s capital structures. Prospective investors can now measure their risk in the company and decide whether to invest in the health system or not. 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.

Determine the key factors that will drive the financial planning process for most organizations in the post-merger phase, and examine the related impact to the organization process. Provide support for your rationale. Post-merger integration is the art of achieving the results dreamed of by investors. The merger made sense for all the right reasons—brand recognition, access to new customers, cost takeout, or global expansion—and the spreadsheets made it black and white—return on investment (ROI) in a year or less. Post-merger integration work is difficult, political, and often driven by teams that still have day jobs. Budgets are undefined, executive leadership is not clear beyond the C-level, no plans exist, and no one has done it before. Companies are willing to spend money on due diligence ahead of signing the papers, but do not always follow through to ensure that targets are met. In many cases, integration team members are plucked from the “operate and maintain” staff, and either cannot see or do not share the strategic vision of the “design and build” dealmakers. Companies that thrive from mergers do eight things (at least) correctly: Have a Plan, Communicate, and Measure Results, Dedicate the Team, Automate, Plan for Turnover, Focus on Business Processes, and Concentrate on Accounting. (Bill Brydges, Morgan franklin, July, 2012) Create an argument to assert that the financial planning process is of high value to a health care organization. Provide support for your argument. Despite a history of strength and stature in America, the hospital institution is in the midst of massive and disruptive change. Such change will be so transformational that by 2020 one in three hospitals will close or reorganize into an entirely different type of health care service provider. Several significant forces and factors are driving this inevitable and historical shift. (David houle, Jonathan fleece, March, 2012) Predict the financial stability of the health care industry over the next five (5) years. Provide support for your prediction. As the economy recovers, health spending is likely to trend upwards, though growth rates are unlikely to return to the double-digit levels we have seen in the past. The analysis attributed most of the current lag (77 %) to economic factors, but predicted that Obama Care could play a role in bending the healthcare cost curve in future years. “Our analysis suggests that over time, the economy is by far the biggest determinant of changes in health spending overall.(Elsie Viebeck,april,2012) The economic burden of aging in 2030 should be no
greater than the economic burden associated with raising large numbers of baby boom children in the 1960s. The real challenges of caring for the elderly in 2030 will involve: (1) making sure society develops payment and insurance systems for long-term care that work better than existing ones, (2) taking advantage of advances in medicine and behavioral health to keep the elderly as healthy and active as possible, (3) changing the way society organizes community services so that care is more accessible, and (4) altering the cultural view of aging to make sure all ages are integrated into the fabric of community life. To meet the long-term care needs of Baby Boomers, social and public policy changes must begin soon. Meeting the financial and social service burdens of growing numbers of elders will not be a daunting task if necessary changes are made now rather than when Baby Boomers actually need long-term care.

Reference David Hughes, (july27, 2011) On Target Performance Group

David Houle, Jonathan Fleece, (March 14, 2012) Policy