Established in 1987, ABC Community Hospital not-for-profit is an acute care hospital located in an east coast Metropolitan area. With a staff of nearly 200 physicians and specialists, 800 employees and 100 volunteers, they offer a full range of healthcare services. They are accredited by the Joint Commission. The hospital has been profitable for the last 5 years with a profit margin of 3-4%.
In March 2012, XYZ Healthcare System, a private, for-profit health care chain, took over management of the 400-bed ABC Community Hospital. In May 2013, officials began to discuss a proposal to build a new wing devoted to a Cancer Center and ancillary services devoted to the treatment of Cancer. The new wing would have 30 acute care beds, four surgical operating rooms, intensive care unit and extensive support services, including physical therapy and Hospice care. All patient rooms would be private. There are no Cancer Centers within a 200 mile radius of the hospital service area.
The Board of directors is concerned with taking on the additional debt of the Cancer Center. They have tasked the CFO with developing a financial plan and strategic plan that will outline the impact of the Cancer Center. They want you to address the following areas:
• What are the key financial policy targets for which the board is responsible for? List and explain each.
• How does the financial planning and strategic planning of the new for-profit status align with the financial and strategic plans of the existing community hospital status?
• Explain how management control is used in conjunction with the financial plan. With the takeover, would the ABC Community Hospital CFO need to consult with XYZ Healthcare System executives for the decision making?
• A financial plan may be thought of as a bridge between two balance sheets. What are the major categories of assumptions that must be specified to project a future balance sheet, given the current balance sheets from the ABC Community Hospital and now XYZ Healthcare System?
1. Introduction
2. Merging the Healthcare Facilities
A ABC Community Hospital
B XYZ Healthcare System
2. Mission, Vision, and Values
A. What will be the pro and cons of the mission statement?
B. What will be the pro and cons of the vision statement?
3. Impact of the Cancer Center
A. What will is the Financial Plan?
B What will is the strategic plan?
C. What are the pros and cons for the Cancer Center?
D.Evaluation of the Cancer Center Capital Investment
4.Profitability objective (return on equity)
5. Assets and debts
6. Strategic Planning
A. What are the important keys to effective planning?
B. what is the best way to plan the strategic planning process
C. Develop a Plan from with all the information from Internal/External Stakeholders
7. Revenue for the hospital
A. What will the budget analysis benefits be?
B. Analyzing the hospital budget
C. Cutting cost where it can be
8. Program and Management Operations
A. Management control
B. Explain management control and how it is used
9. Financial Policy Target
A. Financial planning
B. Revenue Forecasts
C. Income Statement Projections
D. Balance Sheet Projections
E. Objections
F.Set Financial Controls
10. Projecting Asset Items
A. Projecting Liability Items
B. Projecting Equity Items
C. Projecting Discretionary Financing
11. Conclusion
12. References