The board of directors of your for-profit hospital has been approached by a nonprofit hospital to consider a joint venture to take over their business resulting in a larger for-profit medical center status. You have been asked to construct a financial risk analysis for this conversion. Using course materials, including your text and the Internet, and principles of financial risk analysis, evaluate the considerations that a nonprofit hospital has in considering the conversion to a for-profit hospital.

Consider the following options in support of your decision:

• Projected profit and loss statements
• Retention of estimates
• Selected cost of capital
• Other spreadsheets and calculations you feel are needed to support your decision

Consider the following topics in your discussion:

• Key characteristics of nonprofit hospitals that differ from for-profit hospitals
  • Include the characteristics required to maintain a nonprofit status.
• The need for shifts in corporate structure required for survival in this environment, including safety net requirements and responsibilities
• Potential reasons driving both organizations and considerations between an outright merger versus a corporate alliance or joint venture.
• Assessment of the payer mix, financial benchmarks of nonprofit and for-profit hospitals
  • Consider uncompensated care burdens within the for-profit model
• Proffer a decision based on your analysis of whether the organization should convert, create a joint venture, or decline the offer with rationale and justification.