Essay
Milestone One: Propose Organization for Analysis In Module Three, you will select the organization you would like to analyze in part two of the final project using the resources provided.. You will present your proposal to the instructor for approval to ensure that you will have access to sufficient financial information on the healthcare organization to complete the final project. This milestone is graded with the Milestone One Rubric.
Milestone Two: Policy Research In Module Five, you will submit a draft of your policy research report. You will apply the knowledge you have gained through the first half of the course, as well as research current economic environments and legislative changes, to gauge the impact on the healthcare industry through this report. This milestone is graded with the Milestone Two Rubric.
Milestone Three: Organizational Analysis In Module Seven, you will submit a draft of your organizational analysis report. You will apply the economic principles you have examined through this point in the course to your chosen organization in this report. This milestone is graded with the Milestone Three Rubric.
Final Submission: Policy Research and Organizational Analysis Report In Module Nine, you will submit your final project. It should be a complete, polished artifact containing all of the critical elements of the final product. It should reflect the incorporation of feedback gained throughout the course. This submission will be graded with the Final Project Rubric.
Detailed Rubric attached below for assignment as well as other milestones to incorporate to this assignment. Please follow carefully.
Organizational Analysis
Maria Williams
Southern New Hampshire University
Organizational Analysis
HCA Healthcare Incorporation is one of the United States leading healthcare services organizations. As at December 31, 2019, the organization operated more than 180 hospitals comprising 179 general acute healthcare facilities, 3 psychiatric hospitals, and 2 rehabilitation hospitals. The company also operates more than 120 freestanding surgery centers. HCA Healthcare operates in 21 states in the United States and England. The organizations general, acute care healthcare facilities mainly offer a full range of healthcare services to accommodate different medical specialties such as general surgery, oncology, neurosurgery, obstetrics, internal medicine, cardiology, orthopedics, and general surgery. It also offers outpatient services and psychiatric healthcare (SEC, 2019).
HCA Hospital Incorporation is a for profit public organization as evidenced by its financial statements. As a for-profit public organization it must submit its annual report to the United States Securities Exchange and Commission. For-profit organizations must publish their financial statements such as income statement, balance sheet statement, and cash flow statement analysis for public scrutiny. They also trade their shares at stock exchange. HCA Healthcare Incorporations share price as at July 19, 2020 was $106.06 (Yahoo Finance, 2020). An analysis of the companys financial statements shows that the companys revenue increased from $43.614 billion in 2017 to $46.677 billion in 2018 and $51.336 billion in 2019. Net income attributable to common shareholders for 2017, 2018, and 2019 were $2.216 billion, $3.787 billion, and $3.505 billion, respectively. Cash provided by operating activities were $7.602 billion, $6.761 billion, and $5.426 billion in 2019, 2018, and 2017, respectively. Cash used in investing activities totaled $5.72 billion in 2019 compared to $3.901 billion in 2018 and $4.279 billion in 2017. Cash used in investing activities in 2019, 2018, and 2017 were $1.771 billion, $3.075 billion, and $1.061 billion, respectively (SEC, 2019).
From the demand theory perspective, there is higher demand for healthcare services in the fourth quarter of financial year than the other periods. In fiscal year 2019, revenues for first quarter, second quarter, third quarter, and fourth quarter were $12.517 billion, $12.602 billion, $12.694 billion, and $13.523 billion, respectively. In fiscal 2018, revenues for first, second, third, and fourth quarters were $11.423 billion, $11.529 billion, $11.451 billion, and $12.274 billion, respectively (SEC, 2019). Market behavior can also affect the companys financial performance. For instance, changes in general economic performance can affect the companys revenue positively or negatively. Budget deficits at federal entities can have a negative impact on consumer spending and funding for healthcare programs such as Medicare and Medicaid, which represent significant sources of revenue for the organization.
References
United States Securities and Exchange Commission. (2019). Form 10k: HCA Healthcare Inc. Washington, DC: U.S. Government Printing Office
Yahoo Finance. (2020). HCA Healthcare, Inc. (HCA). Retrieved from
https://finance.yahoo.com/quote/HCA/ Policy Research Report
Maria Williams
Southern New Hampshire University
07/26/2020
Policy Research Report
1. Economic Theories and Principles
a. Economic Disparities
Disparities in the distribution of financial resources across populations and organizations affect availability and access to health. Health and personal finance issues individually and collectively affect millions of American households. Many Americans lack the financial capacity to subscribe for insurance of any form while those with insurance are nevertheless exposed to financial risks because of high premiums, deductibles, copays, limits on insurance payments, as well as uncovered services (Dufour, 2019). Therefore, financial constraints limit their capacity to seek quality and affordable health care services. The global and local economic conditions also affect health care firms financial capabilities. Health care organizations that cannot obtain the financial resources or capital specified in their strategic financial plans cannot attain their long-term objectives. Indeed, when the health care institutions find it challenging to acquire any amount of capital when required and at a cost that is reasonable, then their performance may decline. The sources of financing for health care firms can be grouped into equity and debt. In the hospital sector, about 50 percent of total assets are funded with equity while the rest are acquired through debt.
b. Economic Theories
The theory of demand and supply has the strongest relevance in the health care sector. In an free market, the mechanisms of controlling the generation, distribution, and consumption of commodities and services are the frameworks of demand and supply,. Put simply, in an economy, households express a strong demand for a specific product. This often depends on their levels of income and other key factors (Kutran, 2017). On the other hand, enterprises are the ones that generate and deliver the necessary commodities or services with the overall goal of meeting the needs of households or customers expressing specific demand levels. Therefore, the prices of commodities or services increase as their demand decline and reduces when supply increase. The nature of health goods and the manner in which quantities are generated and prices given to patients are also affected by the forces of demand and supply.
c. Use of Economic Principles
Economic principles are widely used in designing long- and short-term organizational plans in the health care sector. The modern patterns of increasing competition across different health firms and the growing effects of globalization collectively contribute to firms use of economic principles to seek new, more efficacious instruments for economic systems management. Such principles can guide long- and short- term planning if the economic systems successfully function (Kutran, 2017). This can result in understanding environmental conditions that are necessary for managerial decision-making and timely development that is aimed at their adaptation to environmental changes. Mangers utilize economic principles to undertake market assessment, analyzing trends, and improving systems, and participating in effective organizational and economic arrangements of such systems management. Through such principles, organizational leaders determine ways of introducing structural, technical, administrative, and cultural changes to improve performance.
2. For- profit and Non-Profit
a. Financial Differentiation
There are various financial differences between for-profit and not-for-profit health care organizations. For instance, not-for-profit organizations do not exist with profit optimization goals while for-profit health care firms are driven by the desire to maximize sales and revenue. As such, non-profit organizations do not have a single indicator of financial performance compared to business enterprises net income or bottom-lime (Bragg, 2010). In fact, the most efficacious indicators of the performance of a non-profit health care firm are generally not measurable in financial metrics such as dollars but rather in the readers qualitative judgment about the effectiveness of the organizations in realizing their overall mission, goal, or objectives. However, the dollars are often the commonly mentioned language of financial reporting in business organization.
Information that is required to support the process of assessing performance is often provided in financial statements through reporting revenues and expenses gross as opposed to net, as well as categorizing expenses on the basis of mission-related programs and supporting activities that they sustain. On the other hand-for-profit organizations assess success and goals using financial metrics such as revenue change, salaries, utilities, depreciation, and change in market share. Unlike business organizations, the bottom-line of a non-profit organizations statement of activities is not always performance measures (Bragg, 2010). Rather, it can be assessed through changes in net assets for the reporting periods. As such, there is no need for not-profit organization to distinguish he components of comprehensive income as business enterprises often do. To the contrary, all the revenues, gains, expenses, and losses are often reported in a single statement that is ambiguous rather than being subdivided into specific financial records and documents such as income statements, balance sheets, as well as profit and loss accounts.
b. Economic Differentiation
For-profit and non-profit organizations in the health care sector often differ significantly with respect to the economic dynamics. Economic forces such as changes in macroeconomic conditions may affect the overall performance of for-profit organizations (Bragg, 2010). For instance, periods of economic recessions may result in the overall reduction in demand for health care products a and services, which in the long-run affects the performance of business enterprises. On the other hand, non-profit organizations may not be affected by changes in economic forces because their main sources of finance are donors and well-wishers. Even in periods of economic downturn, they may deliver their specific goals, which are not often measured financially.
Non-profit organizations often receive money through contributions, a form of transaction that is often without counterpart in business enterprises. These contributions are always subject to donor-imposed restrictions and standards that can affect the types and levels of services that a non-profit organization offers (Bowman, 2011). Due to prevalence of donor-imposed restrictions, recurring, and in some situations, permanent, financial reporting by non-profit health institutions must reflect the nature and extent of donor-imposed restrictions and changes in them that take place during the reporting periods. On the other hand, for-profit organizations often operate under the control of shareholders and corporate leaders (Bowman, 2011). Their sources of funding also differ because they can generate revenue and profits to support their business endeavors. Unlike for-profit organizations, non-profit firms generate income from sources other than selling goods and services.
3. Policy Changes and Disparity
a. Economic Policy and Disparity
The economic policies of a nation significantly influence health care disparities. Ssypuk et al. (2015) observe that while social and economic policies are not often regarded as part of health services infrastructure, they influence health and disease by altering social determinants of health. Majority of social policies such as housing and economic empowerment programs often target low-income populations. However, they rarely consider health as their initial missions and outcomes. Socioeconomic policies that expand education, increase minimum wage, and employment opportunities reduce disparities in health care access (Politzer, Shmueli & Avni, 2019). Therefore, policymakers should incorporate health care access into their programs.
b. Policy Changes
Recent legislative changes have significantly impacted health care access. For instance, policies that increase minimum wage and employment opportunities have increased the rates of seeking insurance cover among low-income neighborhoods. Additionally, the Patient Protection and Affordable Care Act (ACA) increased access to health by increasing insurance cover for low-income neighborhoods.
c. Disparity Planning
The purpose of health care planning is to increase access and availability of health across all populations and groups. Additionally, many public health problems emerge from the existing disparities that stem from social and racial challenges. African-Americans, for instance, have low access to health than their white counterparts. Therefore, health care professionals and policymakers must take into account disparities to implement proper planning.
References
Bowman, W. (2011).Finance fundamentals for nonprofits: Building capacity and
sustainability(Vol. 2). John Wiley & Sons.
Bragg, S. M. (2010).Wiley GAAP: Interpretation and application of generally accepted
accounting principles 2011. John Wiley & Sons.
Dufour, F. (2019). Protecting the US Populations Health Against Potential Economic
Recessions and High Unemployment and the Endemic Inflation of Health Care
Costs.Available at SSRN 3504249.
Osypuk, T. L., Joshi, P., Geronimo, K., & Acevedo-Garcia, D. (2015). Do social and economic
policies influence health? A review.Current epidemiology reports,1(3), 149-164.
Politzer, E., Shmueli, A., & Avni, S. (2019). The economic burden of health disparities related to
socioeconomic status in Israel.Israel journal of health policy research,8(1), 46. Running Head: ANALYSIS REPORT
REPORT
Analysis Report
Maria Williams
Southern New Hampshire University
08/06/2020
1. Organizational Impact and Recommendations
a. Organizational Introduction
The University of Maryland Medical Center Corporation (UMMC) is one of the leading health care organizations in the United States. The company operates as a subsidiary of the University of Maryland and provides not only health care services, but also education and research to the residents of Maryland and the Mid-Atlantic region. Headquartered in Baltimore, Maryland, the United States, the organization has expanded its operations to different parts of the country (UMMC, 2019). Currently, the company offers a wide range of health care products and services, which include trauma treatment, cancer care, high-risk obstetrics, neurocare, neonatology, as well as transplants. The organization has the capacity to admit and accommodate approximately 2500 people because it has more than 2500 beds for acute care. Such inpatient care services are often allocated to critically ill patients who require special treatment for problems such as trauma care, coma emergence, kidney transplants, orthopedic, stroke, and pediatric services.
b. Non-Profit or For-Profit
Maryland Hospital operates as a not-for-profit organization that earns more than $700 million annually on its operations alone. Approximately $700 million of the organizations 2017 bottom-line was concentrated across 24 facilities in Baltimore. The companys profitability increased in 2018 by 5 percent. Additionally, it accumulated an extra financial cushion, ending its 2018 fiscal year with approximately $1.3 billion in cash and investments, according to a report tabled by the federal tax filing system. As a not-for-profit organization, Maryland is not bound by the International Financial Reporting Standards (IFRS). Rather, it operates as an entity whose principal objective is not to generate profit but to provide health care services to Maryland residents and other parts of the country. Not-for-profit companies can be categorized into government or public sector firms and private sector entities. Maryland belongs to the former category, because it has been established by the state government to provide services such as provision of health care services, prevention of disease spread, and increasing accessibility and availability of quality and affordable health care services to disadvantaged and underserved populations. Not-for profit organizations that are formed by the government may be fully owned or their shares issued to members of the public. For a government enterprise to be categorized as a non-profit institution, its primary focus should be on providing more services than merely earning profits.
As a not-for-profit institution, Maryland Hospital is required to support community benefit programs such as providing health services at discounted rates to marginalized groups. Part of this responsibility includes covering medical care costs for the uninsured patients and launching health promotional initiatives to provide preventive, response, and treatment programs to vulnerable individuals in low-income neighborhoods. Approximately half of the financial resources that the organization spends on community benefit initiatives stem from the rates insurers, Medicare, as well as different forms of pay for hospital services. The remaining funds come from the organizations own coffers. In 2019 alone, the organization allocated approximately $309, 401 to promote charitable activities across the state of Maryland.
2. Financials, Market, and Demand
a. Demand Theory
The demand theory can be used to explain the organizations financial statements and performance over the last three years. The companys financial statements from 2017 to 2020 show that it has been witnessing an increase in profitability and revenue. In 2017, the organization earned an average annual profit of $700 million from its operational activities. This figure grew by 5 percent in 2018 and $1.1 billion in 2019. From the above patterns, it can be said that the organization has been witnessing a steady rise in demand for health care services every year. There are various explanations for this phenomenon. For instance, the populations of people who need health services continue to increase over time. Additionally, demand for health care services stems from increase in the number of insured populations. This is because consumers levels of income significantly affect the quantity of goods or services demanded by members of the population.
From the perspectives of the law of demand, consumer behavior is often expressed as a utility maximization problem subject to a particular constraint. The demand functions are often derived by solving the optimization problem. Demand refers to the quantity of commodities or services per unit of time that individuals purchase and consume within a set of the prices and income of the consumer (Adhikari, 2011). Demand models are often founded on the continued choice or discrete decisions. Continuous choices are premised on neoclassical theory of consumer behavior whereas the relatively new discrete choice model is drawn from the random utility theory. Within the econometrics modeling of demand function, the dependent variable often represents the use of health care services. In this respect, the observed utilization levels are representative of the points of intersection of demand and supply functions, a situation referred to as the market equilibrium. In addition, the utilization of health care services represents the satisfied demand or observed demand (Adhikari, 2011). In some cases, it is often difficult to succinctly distinguish between these two functions from the observed data. In this situation, the explicit and implicit presumptions often facilitate the estimate of the demand function.
The continued use of health care services has become an issue that attracts widespread attention by health care economists. Indeed, the factors that influence demand for health care services are important for many reasons. For instance, the task of quantifying such factors is often necessary to examine medical care needs at the community and potential impacts of utilization on health care medical needs of the community for which the organization services. Additionally, demand patterns can inform the organization of the possible impacts of customer decisions on utilization of health (Adhikari, 2011). The understanding of demand patterns can also suggest to the policymakers at the state and federal levels the role of consumers level of awareness and literacy on improving the use of highly cost-efficient health interventions or health care services.
b. Market Behavior Impact
The changes in market behavior and patterns influence demand and supply of health care services. The behavior of consumerism in health care, for instance, has resulted in the significant rise in the number of patients who seek medical care at a particular point in time. This trend has been occasioned by the change of employers health benefit packages into one that places economic purchase power, and decision making in the hands of participants (Vogenberg & Santilli, 2018). This pattern is best attained by supplying employees with the decision-making information and support tools they require, including the financial rewards, incentives, and other benefits that promote personal involvement in altering health and health care purchasing power and behaviors. Additionally, as the health care costs continue to increase for consumers, they are increasingly getting conscious on how prudent they are getting the best value for their money. As such, they continue to ask for transparency and choice in their health care experiences. The success of the organization rests on its ability to meet customers health care needs and expectations (Vogenberg & Santilli, 2018). As such, providers are expected to be the main source of education, information, and the resources that penitents require to take ownership of their health. Additionally, there has been an increase in consumer engagement in health care, which has occurred alongside the increase in their benefit choices that are provided to workers by their employers. As a consequence, more firms are particularly providing HDHP, coupled with the traditional plans as employers shift some of the health costs to employees.
3. Economic Legislative Changes
a. Legislative Changes
At the legislative levels, the company should focus on pushing for changes that increase access to health for disadvantaged and underserved groups. For instance, the organization should collaborate with its multidisciplinary teams of professionals to formulate proper legislative proposals to policymakers. Teams comprising professionals such as physicians, nurses, lab technicians, and clinicians can collaborate to petition the state government to allocate more funds towards increasing insurance cover and promoting health literacy programs to prevent diseases (ibert & Starc, 2018).
b. Policy Changes
There are various policy changes that the organization should consider for it to effectively meet the health care needs of its target population and groups. For instance, the company should consider introducing corporate policies, procedures, and guidelines that facilitate the adoption of technical and technological implementation in its operations. This can be done to increase access to care for patients who are located in remote parts of the country. Additionally, it should introduce policies that enable it to serve uninsured patients. Other policy considerations should include introducing organizational restructuring and process improvement initiatives that can help it to enhance efficacy and serve many clients.
c. Statement Impact
The changes are likely to increase peoples ability to access health care services, which in the long run, can increase the demand for health services. For instance, developing policies and procedures that target social determinants of health such as employment opportunities will increase peoples ability to afford quality health care. This can reflect in the financial statements in terms of changes in the organizations profitability, return-on investment, growth, as well as market share.
d. Potential Disparities
The proposed legislative changes are less likely to cause disparities. On the contrary, they will promote equitable access to health care by eliminating the structural barriers such a level of income and educational challenges that limit peoples access to care. The legislative proposal also advocates for the adoption of technologies that can extend care to rural dwellers thereby increasing their access to quality health.
References
Adhikari, S. R. (2011). A methodological review of demand analysis: An example of health care
services.Economic Journal of Development Issues, 119-130.
UMMC. (2019). University Of Maryland Medical System Corporation.
https://www.dnb.com/business-directory/company-
profiles.university_of_maryland_medical_system_corporation.c04cf705382c530bef5e2fe
bc39c00c1.html
Vogenberg, F. R., & Santilli, J. (2018). Healthcare trends for 2018.American health & drug
benefits,11(1), 48.
ibert, A., & Starc, A. (2018). Healthcare organizations and decision-making: leadership style
for growth and development.asopis za primijenjene zdravstvene znanosti,4(2), 209-
224. IHP 620 Final Project Guidelines and Rubric
Overview
The healthcare industry is impacted by economic factors as heavily as any other industry; therefore, a microeconomic and macroeconomic perspective is
important for healthcare management professionals to have. The key is to determine what and how theories of economics and changes in legislation will impact
healthcare organizations. Your assessment for this course, a policy research and organizational analysis report, is divided into two parts. The first is an analysis
of microeconomic and macroeconomic principles and their impact on healthcare markets, healthcare service, and organizations. The first part will require you to
apply the knowledge you have gained throughout this course, as well as to research current economic environments and legislative changes to gauge the impact
on the healthcare industry. The second part will require you to apply the results of your analysis from the first part to a U.S.-based healthcare organization of
your choice, as you discuss the impact of economic theories and legislative changes on the specific organization. You will make a few general recommendations
for your selected organization that will help them plan for and mitigate negative economic and fiscal impact. These assessments will allow you to examine the
relationships between economics, legislative changes and policies, healthcare industries, and individual organizations, a skill that will benefit you as you
participate in the management of healthcare departments, organizations, and projects.
You will select an organization for your second assessment and use the following resources to ensure that you will have access to the healthcare organizations
financial information: DBHoovers, ProPublica, or American Hospital Directory. You will choose your organization in Milestone One for instructor approval.
This assessment addresses the following course outcomes:
Analyze how organizations utilize key microeconomic and macroeconomic principles to guide strategic planning and decision making in healthcare
Differentiate between nonprofit and for-profit healthcare organizations in terms of monetary and fiscal policy
Analyze healthcare financial statements through the application of demand theory and market behavior
Determine the impact of key economic legislative changes on healthcare policy
Analyze the relationship between economic policy and disparities in healthcare utilizing current research
Prompt
Your policy research and organizational analysis should answer the following prompt: What is the relationship between economic policy changes, the market,
and availability of healthcare? How does this relationship impact specific organizations? Why do organizations in healthcare utilize economic and financial
theories to guide strategic planning, and how do these actions impact disparities of care?
Specifically, the following critical elements must be addressed:
I. Introduction: What is the purpose, scope, and subject of your report?
https://libguides.snhu.edu/dbhoovers
https://projects.propublica.org/nonprofits/
https://www.ahd.com/
II. Economic Theories and Principles:
A. Economic Disparities: Analyze the relationship between the financial well-being of the industry and availability of healthcare, in consideration of
market and demand theories.
B. Economic Theories: What economic theories are most useful when applied to the healthcare industry and why?
C. Use of Economic Principles: Why do organizations utilize economic principles to guide strategic short-term and long-term decision making?
III. For-Profit and Nonprofit:
A. Financial Differentiation: What differentiates for-profit and nonprofit healthcare organizations financially? What characteristics of each type of
healthcare organization make the organizations different?
B. Economic Differentiation: What differentiates for-profit and nonprofit healthcare in terms of economic policies and legislation? What key recent
and current economic policies impact each?
IV. Policy, Changes, and Disparities:
A. Economic Policy and Disparities in Care: Using current research and information (within the last five years), analyze the relationship between
economic policy and disparities in care. How are they connected? How do they differ?
B. Policy Changes: What impact do recent legislative changes have on healthcare economic policy in general? [
C. Disparities Planning: Why are disparities of care factored into healthcare strategic planning? Explain your reasoning and provide examples for
support where appropriate.
V. Organizational Impact and Recommendations:
A. Organization Introduction: What organization is the focus of your report, the sub-industry or type of organization it belongs to (home care,
hospital, etc.), and what is the financial background of the organization?
B. Nonprofit or For-Profit: Is the organization you selected a nonprofit or a for-profit? What differences will this make in terms of economic policy
impact?
VI. Financials, Market, and Demand:
A. Demand Theory: Explain how demand theory is reflected in the organizational financial statements.
B. Market Behavior Impact: Explain how and why market behavior affects the financial statements at various times throughout the calendar year
for your organization.
VII. Economic Legislative Changes:
A. Legislative Changes: Considering the economic and legislative changes you researched, what changes are most likely to impact your
organization, and why?
B. Policy Changes and Impact: Considering the legislative changes and type of organization you have selected, what possible organizational policies
may result? Discuss the possible resulting policy changes that may occur within the organization. What is, or will be, the impact of these policy
and legislative changes on your organization?
C. Statement Impact: In what ways would you expect to see the financial statements to be impacted because of these changes, and why?
D. Potential Disparities: Would the legislative changes cause disparities in care that could further impact your organization, or that your
organization could plan to combat? How would you recommend planning for these?
Milestones
Milestone One: Propose Organization for Analysis
I
