Case Analysis (Healthcare Management)

For this case you will assume the role of Dr. William Harrison, a cardiologist and the director of Cavalier Hospital’s new Rotunda Cardiovascular Center. There are three attached files associated with this case:

1. The case – cavalier hospital 2. Supplement 1 – Financial Analysis for healthcare organizations 3. Supplement 2- business performance evaluation

In your role as Dr. Harrison, you need to review the financial performance of Cavalier hospital and prepare for a meeting with the governing board.

Questions:

1. Based on the information in the three files, please define and describe how to interpret each of the following financial indicators:

• Profitability Ratios: o Operating margin (AKA Profit margin) o Return on equity (ROE)

• Net Revenue Ratios: o Contractual Allowances Percentage o Charity Care Percentage

• Asset Management Ratios : o Days cash on hand o Total asset turnover o Current asset turnover

• Liability and Liquidity Ratios o Current ratio o Debt-to-equity

2. Is Cavalier Hospital financially healthy or sick? – Summarize each of the following financial indicators for Cavalier in relation to changes or trends over time and in comparison, to “comparable” healthcare organizations.

• Profitability Ratios: o Operating margin (AKA Profit margin) o Return on equity (ROE)

• Net Revenue Ratios: o Contractual Allowances Percentage o Charity Care Percentage

• Asset Management Ratios : o Days cash on hand o Total asset turnover o Current asset turnover

• Liability and Liquidity Ratios

o Current ratio o Debt-to-equity

3. Do you have any concerns regarding the following? Why/why not?

• Contractual allowances • The Rotunda center • The expansion of Hamilton hospital

4. How has Cavalier’s position changed financially after the opening of the Rotunda Cardiovascular Center?

5. What is Harrison’s rationale for seeking capitated payments? Do you foresee any perverse incentives by having some of the patients on a capitation reimbursement structure and others on a fee-for-service model?

6. Should Harrison advocate an expansion of the Rotunda model across all specialties in the hospital? If so, what financial trends should he seek to continue or reverse in implementing the new model?

NOTE: there is no specific number of words or pages as long as you do all the requirements. Just make sure to talk and explain all the requirements. EACH point one by one.