Financial Forecasting Case Study Complete Case 31- River Community Hospital (B)- Review Case 31...
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Financial Forecasting Case Study
Complete Case 31: River Community Hospital (B):
- Review Case 31 (B), pages 217–219, in your Cases in Healthcare Finance text. You will find a case spreadsheet model via the Student Spreadsheets link in the Resources area. (Select Case 31 to download the Excel spreadsheet.)
- Write a case review that addresses financial forecasting. Your review should be approximately three pages.
Note: Your instructor may also use the Writing Feedback Tool to provide feedback on your writing. In the tool, click the linked resources for helpful writing information.
APA formatting: Resources and citations are formatted according to APA (6th Edition) style and formatting.
Case website (http://www.ache.org/pubs/hap_companion/chapters.cfm?chap=333)
River Community Hospital is a 210-bed, not-for-profit, acute care hospital with a long-standing reputation for quality service to a growing service area. River competes with three other hospitals in its metropolitan statistical area (MSA): two not-for-profit and one for- profit. It is the smallest of the four but has traditionally been ranked highest in patient satisfaction polls. For a complete description of the hospital, along with its 2011–2013 financial statements, see Case 1: River Community Hospital (A). As the newly hired special assistant to the CEO, you have com- pleted the financial and operating analyses (see Case 1) assigned by your boss, Melissa Randolph. In fact, your presentation to the board of trustees went so well that Melissa asked you to present the hospital’s preliminary five-year financial plan at the next board meeting. To aid in the planning process, she provided the following information: 1. Given your knowledge of the historical situation for River, current trends in the healthcare industry, and the competitive situation facing hospitals today, use your own best judgment to create the hospital’s financial plan. Make any assumptions you believe to be necessary to create the plan, including assumptions about inpatient and outpatient volume growth, capacity constraints, reimbursement patterns, hospital staffing patterns, input cost inflation, and so on. Be sure to completely document your assumptions in the
though they might be a perfect reflection of historical trends. Similarly, a forecast that is wildly optimistic probably needs to be modified because payers and competitors likely would react to dampen profitability if it rose dramatically. In closing, Melissa gave you her view of a good financial plan: “First and foremost, the plan should consist of pro forma financial statements along with a table that summarizes the amount of financing generated internally and any external financing requirements. Second, key financial ratios should be calculated, and the hospital’s expected future financial condition should be assessed, with special emphasis on changes from the hospital’s current condition. Third, make sure that your forecasted financial statements are consistent with one another. The last special assistant could not figure out that two balance sheet accounts—equity (fund) capital and accumulated depreciation—are tied to income statement items, so he did not last very long. Finally, make all your assumptions clear, and be prepared to answer questions from the board concerning the impact of changes in your assumptions on the financial plan.”
Financial Forecasting Case Study Scoring Guide
Due Date: End of Unit 4. Percentage of Course Grade:5%.
Note: Your instructor may also use the Writing Feedback Tool to provide feedback on your writing. In the tool, click on the linked resources for helpful writing information.