this is assignment 1
Financial Statement Analysis
October 25, 2016
Financial Statement Analysis
Based on your review of the financial statements, suggest a key insight about the financial health of the company. Speculate on the likely reaction to the financial statements from various stakeholder groups (employee, investors, shareholders). Provide support for your rationale.
Health Management Associates, Inc. (NYSE: HMA) is the operator and owner-general acute care centers in the non-urban communities situated in the US, particularly in the Southwest. The organization was founded in 1977. The hospitals provide services such as oncology, emergency room care, general surgery, internal medicine, radiology, pediatric services, coronary care, and diagnostic care (www.healthcaremanagement.com).The company is also providing outpatient services like x-ray, respiratory therapy, one-day surgery, laboratory services, physical therapy as well as cardiology therapy. The mission of the Health Management is to provide America’s best local healthcare. They provide processes, capital finance, expertise, and people that can ensure that the local hospitals can accomplish their mission of delivering compassionate and high-quality healthcare that would substantially improve the lives of patients, the communities they serve, and the physicians providing the care www.healthcaremanagement.com)
With regard to the review of the current financial statement, HMA is in a dangerous financial state as a result of the present increasing debts and legal woes. The Office of the Inspector General, Justice Department, and the Department of Health and Human Services served the organization with summons regarding a software program that was used by ED doctors and the records from the emergency department. Some reports suggested that there was pressure from the company’s hospitals management to admit patients from emergency rooms so as to maximize profits. Paul Meyer, former compliance director, claimed that HMA’s fraudulent activities could attract government investigation (Britt, 2012).
The common stock of Health Management Associates was owned by almost 850 shareholders, as per the records of December 31, 2012, with hundreds of institutional investors included. HMA had expanded to include 70 hospitals situated in 15 states, with roughly 10,562 present licensed beds. In 2012, HMA realized about $5.9 billion in net revenue (Britt, 2012).
HMA gets payments for the services it renders from the federal government through the Medicare program, the states in which it functions under each Medicaid program, and commercial insurance, among others; and patients, encompassing deductibles and co-payments. Basically, deductibles and co-payments are part of the bill of patients for the medical services provided, which many government and private payers expect the patient to cater for. The amount of deductibles and co-payments varies depending on the provisions of the health plan in which the patient is participating. The company is currently collecting approximately 50-55% of the co-payments and deductible amounts. In the recent years, efforts have been increased to collect the deductible and co-payments amounts at the same time when services are provided. These payments are subject to the same collection practices as done with other patients’ accounts receivables.
Identify the current industry trend that has the most significant impact on your chosen organization’s financial performance. Indicate the trend’s impact on the financial performance of the organization. As the CFO, suggest at least one (1) way that you might minimize the impact of the trend on the organization.
Declining hospital admissions is the current trend that impacts the financial performance of HMA. Many patients have opted to withdraw or delay elective procedures and surgeries. As a result of the 2007 recession, many people lost their health insurance due to job losses and the decreasing employer-based healthcare coverage benefits. This included in the mix, the increasing number of uninsured patients, bad debts, uncollectible revenues, and radical reduction of federal funding that many hospitals depended on. As the CFO, we intend to increase revenue at our hospitals through the provision of quality healthcare (Ginter, Swayne, & Duncan, 2002). As a result, admissions, emergency room visits, surgical volume, and outpatient visits will increase.
The hospitals are directed and administered at the local level by the chief executive officer. Well, one of the crucial elements of our strategy is to develop and maintain a cooperative association with our physicians and care providers. We would maintain a physician recruitment and development program which is designed to entice and retain qualified primary care physicians and specialists, in conjunction with our present community and physician needs, to expand the services provided by the hospitals. In order to end this trend of few admissions being realised in the hospitals, we also intend to create a special program that is designed to develop attractive practice opportunities for qualified physicians in the regions that our hospitals serve so as to develop outstanding medical staff, improve the retention and satisfaction of the primary care providers and the physicians, and also develop practise models which are sustainable in the competitive healthcare environment (Longest, Rakich & Darr, 2000).
As the CFO, suggest one (1) key strategy that you might use to improve the financial performance of the organization. Recommend an approach to implementing the suggested strategy. Provide support for your recommendation.
As the CFO, I believe that forming a merger with Community Health Systems is a good step to ensuring that financial performance of the organization is improved. The merger would serve as an optimal time for the new organization to develop a culture of openness, learning, support, and improvement to ensure its financial survival. It would be my responsibility to cooperate with the senior management to create and implement effective internal control initiatives which will encompass authorization, ethical leadership, and oversight within the organization. Transparency must be instilled in the organization with regard to procedures and policies to develop trust among the employees and other stakeholders. Leaders have the responsibility of leading by positive example; setting the way to be followed, demonstrate confidence, and being accountable (Ginter, Swayne & Duncan, 2002). Such an environment will be a point of motivation for the physicians. As a result, they will provide quality services to the patients. This will attract more patients to come in for medical attention hence increasing revenue collection.
About us: Health Management Associates. Retrieved October 21, 2016 from http://www.healthmanagement.com/
Britt, R (2012, December 3). HMA feels fallout from “60 Minutes” story. The Wall Street Journal.
Ginter, P., Swayne, L., & Duncan, W. (2002). Strategic Management of Health-Care Organizations (4th Ed.). Malden, MA: Blackwell.
Longest, B., Rakich, J. & Darr, K. (2000). Managing Health Services Organizations & Systems. Baltimore: Health Professions Press.
We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.Read more
The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.Read more
The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.Read more
By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.Read more