- “Healthcare Finance Project”
- A.Ratio analysis
- 1.Liquidity Ratio:
- Quick Ratio:
- Cash Ratio:
- 2.Solvency Ratio
- B.Comparison of financial strengths and weaknesses of hospital
- Financial Strength of Harris Memorial Hospital:
- Financial weakness of Harris Memorial Hospital:
- C.Overview of the financial Health of the hospital
- D.Explanation of Financial analysis
- E.Two strategies for improving the hospital financial position
- Two Strategies:
- Reference List
capital project management, and management control for health services administrators
2. Employ financial tools and methodologies used across the healthcare industry
3. Outline the financial structure and market forces at play in a healthcare system.
“Healthcare Finance Project”
So, Current Ratio for the year 2017= Current Asset / Current Liabilities
= 194235/ 103522 = 1.876
Current Ratio for the year 2016 = Current asset /Current Liabilities
= 156381/ 96897 = 1.614
So, it has been seen from above result that current ratio is increasing and for that reason the asset earning is increasing for Harries Memorial Hospital from the year 2016 to 2017 (The American Association of Individual Investors, 2018).
Quick ratio= (Cash and Cash Equivalents + Short Term Investments + Current / account receivables)/ Current Liabilities
So, quick ratio for the year 2017= (82815+ 0+ 70025)/103522= 1.48
Quick ratio for the year 2016= (59696 + 0+ 59939)/ 96897=1.23
Cash Ratio is defined as
Cash ratio= (Cash equivalents + Cash)/ current liabilities
Cash ratio for the year 2017= (82815/103522) = 0.799
Cash ratio for the year 2016= (59696/96897) =0.616
From the above ratio analysis, it can be concluded that Harris Memorial Hospital holds good amount of Cash which they can invest in other sector for better return or they can spread as dividend to the shareholders for goodwill.
The ratio is given by (Net after-tax income + Non-cash expenses)/ (Short-term liabilities + Long-term liabilities).
So, Solvency ratio for the year 2017= (800209/103522) = 7.73
Solvency ratio for the year 2016 = (746021/103522) = 7.67
So, it can be concluded from above calculation that there is a moderate solvency ratio for which risk can be covered as it is a new business (Lane, 2018).
B.Comparison of financial strengths and weaknesses of hospital
Financial Strength of Harris Memorial Hospital:
2.Strong commitment to the staff and community
3.Higher level of organizational efficiency
4.Outstanding healthcare quality
6.High liquid cash investments
7.Good earning from charity project
8.Planned Health Insurance program
9.Fair chance of excess revenue generation (Foster, 2004).
Financial weakness of Harris Memorial Hospital:
2.Shortage of critical stuff.
3.Lack of Primary care Network
4.Lack of adequate support when needed as number of donor is not increasing.
5.Gifts and long lived assets has explicit restrictions
6.Donor trust liabilities are also included and the net unrealized loss is expected as high as $9,183,000 (Devaraj & Kohli, 2003).
C.Overview of the financial Health of the hospital
There is a strong growth in the liquidity position in the year 2017 from the other year 2016. There are altogether 27 skilled Nurse who are tremendously working day and night for the patients. The approximate construction contract is $7,360,000 which can be repayment by additional revenue generation through Harris Health Plan project (Cleverley & Cleverley, 2018).
The accounts receivable is up to 20% rising whereas it is 29% from the health plan project. As per the agreements it is restricted to use the asset and only 20% can be reinvesting for better return. This concludes not much investment possible from the cash or revenue generation.
However, the property and other equipment have long life and are considered as depreciable after 40 years. For that scenario, hospital is no need to extra high cost to implement in other physical resources.
So, the overall financial health condition can be considered as good and ongoing for the new health project, Harris Memorial Hospital (Richter & Muhlestein, 2017).
D.Explanation of Financial analysis
E.Two strategies for improving the hospital financial position
2.To implement cancer and aids recovery research program which is needed to be developed under community foundation. This initiative will increase the financial revenues by accumulating such projects from WHO or UNICEF. Through this kind of program, it is very important to modify the patient care as good as possible. There is a positive impact has been observed towards the healthcare association which having the benefits of urgent care and cure. Also the research opportunities are found to be enhanced within this kind of program which is also tremendously helpful for the improvement of financial position of the healthcare associations (Pollitt & Bouckaert, 2017).
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Devaraj, S., & Kohli, R. (2003). Performance impacts of information technology: Is actual usage the missing link?. . Management science, 273-289.
Foster, G. (2004). Financial Statement Analysis,. New York: Pearson Education India.
Harris Health System. (2016). Harris Health Annual Report. Retrieved from https://www.harrishealth.org: https://www.harrishealth.org/SiteCollectionDocuments/annual-reports/annual-report-2016.pdf
Lane, M. (2018). Ratio Analysis. Retrieved from http://www.zenwealth.com: http://www.zenwealth.com/BusinessFinanceOnline/RA/RatioAnalysis.html
Pollitt, C., & Bouckaert, G. (2017). Public Management Reform: A Comparative Analysis-Into the Age of Austerity. . London: Oxford University Press.
Richter, J. P., & Muhlestein, D. B. (2017). Patient experience and hospital profitability: Is there a link? Health care management review, 247-257.
The American Association of Individual Investors. (2018). 16 Financial Ratios for Analyzing a Company’s Strengths and Weaknesses. Retrieved from http://www.aaii.com: http://www.aaii.com/journal/article/16-financial-ratios-for-analyzing-a-companys-strengths-and-weaknesses.touch