One of the ways to come out of this crisis is to avail short term loan from banks or to increase its equity by resorting to further allotment. During the month in question, the cardiac surgery has fallen short of by 1 with that of budgeted. The hospital management should look into the reasons for the decline in cardiac surgery and try to improve the same. Though, an annual basis, it has exceeded the budgeted numbers, it is necessary to analyze the reason for shortfall during March 2008 so that any negative results may be avoided during the current financial year.
The company is able to achieve an operating profit or EBIT of 33%. It is better to benchmark the hospital’s net profit ratio with that of others in the industry so as to analyze the hospital’s overall performance and to find out best performing as well as non-performing areas. A hospital can enhance its overall performance by having updated knowledge of the hospital industry , able to generate good reports on financial performance , foster a strategic vision by recognizing market demands and to have qualified employees and to maintain a capable physician recruiting method.
Further financial health of a hospital can be measured by using following techniques. ? FSI ( Financial Strength Index ) ? Modified Z Score ? Fund flow coverage ratio ? Cash flow to total debt ratio ? Cash Interest coverage ratio ? Operating cash flow ratio. (Price ,2005) How Englewood Hospital and Medical Center financial reports will be useful to CEO, CFO, Nurse Executive and Board of Trustees. CEO Though the overall performance is satisfactory, CEO of the Englewood hospital has to analyze why current actual vs.
budgeted figures have declined by 50% than compared to last year. He has to find ways and means to improve the actual performance with that of budgeted performance at par with the last year figure so that overall performance of the company can be improved during the current year. CEO has to analyze and control the expenses and to find out why expenses during the year have soared than that of last year. By controlling expenses, CEO can increase the operating profit of the hospital to higher levels.
CEO should call for report from nurse Superintendent about the reasons for under performance in Cardiac surgery and new born patient days division and try to improve the performance by finding solution to the problem immediately. CFO The immediate concerns for the CFO is to increase the liquidity to meet the short-term obligations either by improving the collection from debtors or by extending the accounts payable due date by 120 days or by sourcing additional working capital from commercial banks or by resorting to further issue of capital.
CFO should also try to control the overheads to improve the profitability of the hospital. Nurse Executive: The Nurse Executive should investigate whether there is any shortfall in service in the area of cardiac surgery and in the new born patient days division. Is any further service is to be provided? A survey can be conducted with the patients about the quality of the service offered and any recommendation by patients should be implemented. Board of Trustees:
Board of trustees should ensure from CEO and CFO that all statutory compliances like adhering to accounting standards, complying the provisions of Sarbanes-Oxley Act and proper internal controls and checks and balances are in place. Board of Trustees should pay more attention to audit committee reports and any recommendations should be discussed in the trustee meeting and steps should be taken to initiate those recommendations. Thus, Englewood Hospital and Medical Center can be buoyant since its overall performance seems to be positive but it should concentrate on the following to maximize its revenues.
It should analyze why it’s overhead have increased in 2008 and to concentrate to minimize the same. Further, performance of the Newborn patient day department and cardiac surgery department has to be improved by analyzing the reasons for the decline. Further, it has to improve its receivable management so that it can meet short term pressing obligations with the help of internal accrual.
References
Barr, M. J. (2002). The Jossey-Bass Academic Administrator’s Guide to Budgets and Financial Management. San Francisco: Jossey-Bass. Mcmenamin, J. (1999). Financial Management: An Introduction. London: Routledge.