assessment #2

hmgt_322_assessment_2.docx

Home >Business & Finance homework help >Financial markets homework help >assessment #2

· Assessment # 2 Case Study of a Health Care Organizations Financial Health

Assessment #2: Case Study of a health care organization’s profitability (15%)

In this assessment you will use the data provided below and conduct a profit (CVP) analysis. You will be graded based on your understanding of profit (CVP) analysis, the accuracy of your calculations, the validity of you conclusions and your ability to clearly communicate your analysis. To complete this assignment, follow these steps.

1. Assume the following information about cost and charges for a hospital in 2014:

Volume = 15,000

Fixed Costs = $10,000,000

Variable cost per inpatient Day = $200

Charge Per Inpatient Day = $1,000.

2. Review Nowicki Chapter 6 and Gapenski Chapter 5. From what you have learned in these chapters do the following:

a) Construct the hospital's base case projected profit and Loss statement

b) Explain the difference between an accounting profit and an economic profit

c) What is the hospital's break even point?

d) Define the contribution margin? What is it's economic meaning?

e) What volume is required to provide a profit of $1 million?

f) What volume is required to provide a profit of $500,000?

g) Explain in general how breakeven points vary in a capitated vs. non-capitated environment.

h) Now assume that 20% of the hospital's inpatient days come from a managed care plan that wants a 25 percent discount from charges. Should the hospital agree to the discounted proposal.

In submitting the above information, please show all calculations to get to the final answer and be sure to include a cover page with your name, class/section and instructor’s name

You will be graded base on the following rubric:

90-100	80-89	70-79	0 Points
The student demonstrates a thorough understanding of the meaning of all the financial calculations and their applicability to the organization being analyzed.	The student demonstrates a reasonable but not complete understanding of the financial calculations measured and their applicability to the organization being analyzed.	The student demonstrates a limited understanding of the meaning of the ratios chosen and their applicability to the organization being analyzed.	The student does not demonstrate an understanding of the meaning of the ratios or how they can be used to assess the organization’s financial condition.
All of the financial calculations are calculated accurately	Only 2 of the financial calculations are calculated accurately	Only 1 of the financial measures are calculated accurately	None of the financial measures are calculated accurately.
The student draws accurate conclusions for each of the financial measures and for the overall financial health of the organization.	The student draws some accurate conclusions for each of the ratios and for the overall financial health of the organization. There are a few mistakes	The student draws few accurate conclusions for each of the financial measures and for the overall financial health of the organization. There are several mistakes	The student’s conclusions for each of the financial measures are inaccurate and the overall conclusion on the financial health of the organization is not valid.
Writing quality: Writes clearly, concisely, and with few errors. Easy to understand.	Writing quality: Writes with some errors but the paper can be readily understood.	Writing quality: paper includes numerous errors. Requires some effort to understand.	Writing quality: The paper is poorly written and is difficult to understand.