Financial Statement Analysis Health, Medicine, Nursing Essay (Essay Sample)
The purpose of this assignment is to evaluate the impact of a financial analysis on administrative decisions in a health care organization.
Review Northwestern Memorial HealthCare's "Consolidated Financial Report" (Years Ended August 31, 2019 and 2018), and answer the following prompts in an 1,200-1,500-word essay:
Discuss the importance of and need for a financial analysis within a health care organization.
Explain the relationship between a health care organization's financial plan and debt policy to its strategic plan.
Assess the financial position of Northwestern Memorial HealthCare in 2019 as compared to 2018. Give specific examples of areas where improvement is needed or areas that should be of concern in terms of financial viability.
Based upon these observations, make recommendations that management should consider from a strategic standpoint (i.e., strategic budgeting methods).
Include an introduction and conclusion, and be sure to cite three to five peer-reviewed scholarly sources (including the supplied financial report) to support your claims.
Managers at all levels need to understand finance fundamentals, especially in a world where financial realities influence positive healthcare outcomes. Hospital managers' responsibility can be summarized into the four C's: costs, cash, capital, and control. The measurements and implementation of policies to minimize cost are critical to the smooth operation of healthcare facilities. Hospitals require licensing from the state by undergoing inspection s for compliance with state regulations. Consequently, they are accredited by The Joint Commission, a voluntary process intended to maintain high care standards. Therefore, hospitals need to manage their cost to achieve compliance and gain eligibility for participation in the Medicare and Medicaid programs. This essay analyzes Northwestern Memorial HealthCare's financial position to understand the importance of financial analysis better.
The main need for financial analysis is an estimation of cost, profitability planning, and budgeting. Healthcare facilities need to manage their cash and supply inventories. Having developed infrastructure will enable facilities to collect money for services rendered effectively. Therefore, it is the chief financial officer's responsibility (CFO) to facilitate operational effectiveness and cost reduction. In addition to cutting costs, financial analysis can help an organization raise funds to support operations. Decisions need to be made regarding the long-term and short-term debt approach of the organization. Consequently, senior managers must decide on the use of leases versus other conventional methods of financing.
The future of an institution largely depends on the efficiency of capital investment decisions. Financial analysis helps managers make decisions on new facilities such as land, buildings, and equipment. Capital investments rely on an institution's ability to manage its finances by cutting costs and raising funds. Consequently, enough funds are available to help implement strategic decisions that guarantee an institution's financial future.
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