Using Ratios as Performance Indicators and Inflation and Health Care Costs"

• Suggest one (1) key financial ratio that a health care administrator should create a trend analysis for. Suggest one (1) key insight that may be gained by the administrator in regard to the performance of the organization. Provide support for your rationale.
• UsetheInternetorStrayerdatabasestoresearchthecurrentandprojectedinflationratesandtherelatedimpactexpectedonhealthcarecosts.Next,assessthelevelofimportanceofone(1)keydriveroftheinflationofhealthcarecosts.Indicatehowthisinflationcanbemanagedstrategicallyinthefuturetominimizethefinancialimpact.Providesupportforyourrationale.
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Week 6 Discussion "Using Ratios as Performance Indicators and Inflation and Health Care Costs" Suggest one (1) key financial ratio that a health care administrator should create a trend analysis for. Suggest one (1) key insight that may be gained by the administrator in regard to the performance of the organization. Provide support for your rationale. Businesses use trend analysis to compare data in order to identify trends that are consistent over time as this process will enable managers to respond to such trends and align them with their business goals. Trend analysis predicts the future of an organization's performance based on past data. It picks on what has been to predict what will be in the future. A good trend analysis will help managers strategize on how to move the business forward by identifying what works for the business. Trend analysis will also help management to identify areas where the business is not performing well in order to make informed decisions that will favor the organization. One key financial ratio that a health care administrator should create a trend analysis for is the efficiency ratio. Efficiency ratio shows an organization's efficiency of productivity. Provider productivity measure allows management to follow the past productivity trend of the organization and compare it with similar organizations and other benchmarks to ascertain the national or state average in order to ensure that the organization's performance is on a positive course. Monitoring provider productivity may require some scheduling improvements. The dashboard will include number of patients seen by a provider, department, and site; percentage of appointment slots filled; no-show rates by department and site. Sometimes medical costs could impact on productivity. In this case, the dashboard will include a ratio of uncompensated care and ratio of changes in reimbursable costs in order to make necessary service adjustments to maximize profit. One key insight that may be gained by the health care administrator in regards to the performance of the organization is that efficiency measurement will enhance SWOT analysis of the organization in terms of organizational goals, competitors, and market share. Tracking efficiency ratio will help the administrator in identifying trends in their early stages including areas that need improvement before it becomes a problem for the organization. Knowledge of critical factors in business performance will assist the administrator in implementing strategies that will lead to sustainable performance improvement. Asset turnover ratios show efficiency in the way the organization is using its assets. The sum is sales or revenues divided by total assets. A higher ratio shows that the company is doing well and generating more revenue for every dollar of an asset. Analyzing your financial ratios http://www.tdbank.com/small_business/workshops/Ratios/textratio_analysis.html Use the Internet or Strayer databases to research the current and projected inflation rates and the related impact expected on health care costs. Next, assess the level of importance of one (1) key driver of the inflation of health care costs. Indicate how this inflation can be managed strategically in the future to minimize the financial impact. Provide support for your rationale. According to the latest inflation rate published by the US government on April 17, 2015, the current inflation rate is -0.1% for the twelve-month period that ended in March 2015. The annual inflation rate has been negative due to lower gasoline prices. Projected inflation rate up to December 2015 is 2.35%. Inflation rates are calculated using consumer price index published by the Bureau of Labor Statistics on a monthly basis. Economic inflation accounts for the rise in health care costs and every essential of life. An increase in health care costs has created a financial burden on U.S families so much that even families with health insurance are still not able to carry the burden of their medical bills. The rising cost of care has increased the number of uninsured persons seeking medical care thereby placing employee-sponsored health insurance as the primary source of insurance. The health care sector is ever burdened with the necessary need to promote job security and staff retention through the provision of adequate health benefits to their employees. The cost of healthcare presents an enormous expense for companies doing business in the U.S thereby placing them at a competitive disadvantage in the global market. Healthcare cost inflation has been heightened by advances in medical technology, an increase in demand for healthcare services, price inflation, cost sharing, aging population et cetera. One key driver of high medical cost is the technology that has also enhanced the use of medicine and made once complicated surgical procedures much safer and secure. Technology is every patient's expectation while going through a procedure, the doctors are trained to use it, the medical industry makes billions of dollars selling it. It is the trend that has increased health outcomes positively. Obama care is shifting the burden of health care costs from payers to providers. Therefore, it behooves on providers to make changes that will help in reducing costs of care by eliminating waste and inefficiency. A strong government hand can effectively implement cost control through strict policies on the adoption and diffusion of technology, negotiated physician fees, and hospital budgets with limits on expenditures. This can only be achieved through universal care. Health Care Costs and Medical Technology-The Hastings Center http//www.thehastingscenter.org/Publications/BriefingBook/Details.aspx?id=2178 USING FINANCIAL RATOS 1 Using Financial Ratios to Assess Organizational Performance Bobbie Washington Strayer University HAS 525 Dr. Davis November 14, 2014 USING FINANCIAL RATOS 2 \"United Health Services, Inc. is the fifth largest for-profit hospital operator In U.S. and one of the America largest publicly-traded psychiatric and substance abuse facility provider. Since the competition has increased for UHS in the hospital industry has cause pressure on the margin in the company business, but the organization has to compensate for having strong earning in their behavioral health segment.\" (Washington & Bobbie, 2016) Financial ratios use by financial analyst help to examine the financial condition and performance of a company. Financial analysts look many different kinds of ratios the two most important ratios that that are used by the analyst are liquidity and profitability ratios. Financial ratio allow financial managers to examine opportunities. The Financial analyst job is to study a company's financial statement looking closely at the return on investment in the company carious asses as well as the efficiency of asset management. In order to get the ratios numbers involves analysis and using the financial statements of the company. The financial statements involves many things. The first financial statement shows the assets and liabilities of an organization at a moment in time usually at the end of a year. Financial analyst uses the statements to compare the present ratios with the past ratios of the same organization by using the statement form the past. Analyst use ratios from other firms to compare with firms in the same industry. An analyst should first look at profitability ratios, because they measure a company's ability to generate earnings relative to its expenses and other costs. There are two types of profitability ratios. The first profitability ratio is operating margin and it is always expressed as a percentages. Operating margin expresses the company income lost which is divided by the company total operating revenues. The ratio is use for managerial purposes and can also sometimes be enter into credit analysis. It is universal that a lot of outside sources use it for comparative purposes. The USING FINANCIAL RATOS 3 computation result must be carefully considered because of the variable in each period. The next profitability ratio is return on assets. Return on assets is earning before interest and taxes (EBIT) divided by total assets. Over the years, Universal Health Services as seen revenues that remain relatively flat, like for example ($6.8B USD to $7.0B USD) but they but they were able to grow their net income from $398.2M USD to $443.4M USD) this was a key component in the bottom line growth in the face of flat revenues. Considering the massive growth in net income and bottom line growth in the last four years, it seems that they should have no problem in meeting financial obligations as they come due. UHS has seen substantial growth every year since 2009 with a significant increase in growth between 2010 and 2011 when UHS acquired \"Psychiatric Solutions Inc., one of the nation's largest operators of behavioral health facilities (www.uhsinc.com/timeline.php).\" Because of this acquisition it allows the company make the revenue to meet their obligations. When preparing financial statements must make sure that they take all information into account and examined it properly. Ratio analysis helps financial analysts figure out the financial health of United Health Services. It is important information on the financial statement remain balanced. UHS can compare two different areas to determine the strengths and weaknesses in financial matter by using ratios. Ratio analysis are very important form of analysis use by UHS. Financial ratio analysis helps organization to it determines whether, the organization will be in a viable position to 5 years. Financial analysis will take certain ratios into consideration. The organization will consider net profit ratio, current ratio, return on equity and return on assets. \"The majority of UHS revenue comes from the hospital, and it has significantly impacted because of the shift in the hospital industry toward physician-run health facilities, and this has USING FINANCIAL RATOS caused a significant increase in competition for the company's hospitals in their urban markets. Another thing this has a substantial impact on the organization bad debt expense is the rising numbers of uninsured patients world - wide the United Health Services capital is in a stable position; it has been able to develop and require many new facilities over the past few years\". (Washington & Bobbie, 2016) 4 USING FINANCIAL RATOS 5 References Gengler, A. (2011). The future of your health care. Retrieved May 4, 2013 from http://money.cnn.com Harrington, J, H., & Voehl, F. (2010, March). Innovation in healthcare. International Journal of Innovation Science, 2(1), 13-27. Retrieved May 4, 2013 from http://EBSCOhost database Health Care Utilization. (n.d.). Retrieved May 4, 2013 from http://www.cdc.gov United Health Services. http://www.uhs-in.org/