FINANCIAL DATA

Part I: Analyze Organizational Financial Data

You are an administrator at Arizona Health Services (AHS), a large hospital system. You have been asked to assist in evaluating the financial feasibility of purchasing Jiranna Healthcare, a managed care organization in the San Jose area. For this part of the Performance Task, you will conduct a 5-year analysis of Jiranna Healthcare’s operational and financial data in order to determine whether or not it is an attractive acquisition. Refer to “Jiranna Finances” for financial statements to analyze.

Prepare a 2- to 3-page financial analysis. The focus must be on the content and the depth of your analysis. Unless otherwise indicated, a 5-year trend analysis—including the most recent year of available data—is expected.

Complete your analysis as follows:

• Calculate the 5-year net sales, operating expenses, operating income, and net income of Jiranna Healthcare. Once calculations are complete, interpret the resulting data and explain the significance of the trend results.
• Calculate the 5-year total profit margin, asset turnover, return on assets, and return on net worth. Once calculations are complete, interpret the resulting data and determine the company’s profitability.
• Calculate the 5-year current ratio, day’s cash on hand, and working capital. Once calculations are complete, interpret the resulting data and assess the company’s liquidity.
• Calculate the 5-year debt ratio and times interest earned ratio. Once calculations are complete, interpret the resulting data and explain the company’s long term solvency.
• Complete a DuPont analysis for each of the five most recent years. Once calculations are complete, interpret the resulting data and determine the company’s individual DuPont characteristics (e.g., total margin, total asset turnover & equity multiplier) and trends across the analysis period.
• Ultimately a decision has to be made. Would you recommend purchasing Jiranna Healthcare? Why?

Part II: Case Study #2

For the next part of this Performance Task, you are expected to complete a number of calculations, and then interpret the numbers to provide recommendations based on these analyses. It is essential both to show your work and calculations, and to demonstrate how these calculations support your conclusions. Be sure to explain your reasoning. You will be assessed on the accuracy of your quantitative analyses and the quality of the evidence you use to support your conclusions.

Imagine that you are an administrator at Jiranna Healthcare who has been asked to analyze cash-flow data to determine the costs and benefits of implementing a new capital project. For background, read “Capital Project Case Study, Part 1.” Then, complete the “Capital Project Case Study, Part 2” spreadsheet, which provides cash-flow data (costs and benefits) for the proposal. Download and save the Excel spreadsheet, and use the information provided to complete the following:

• Calculate the cash inflows and outflows for each year.
• Calculate the following metrics:
  • Net present value (NPV)
  • Internal rate of return (IRR)
  • Modified internal rate of return (MIRR)
  • Payback period
  • Discounted payback period
• In a 1- to 2-page report, provide your recommendation with rationale, as to whether the project is acceptable, assuming Jiranna has a corporate policy of not accepting projects that take more than 3.5 years to pay for themselves, and assuming an 11% cost of capital

Part III: Conduct a Budgeting Evaluation

You are an administrator at Jiranna Healthcare. You have been asked to conduct a budget variance analysis: analyzing performance by comparing budgeted workload, revenue, and expenses for a range of different service lines, with actual workload, revenue, and expenses for those service lines.

Open the document “Variance Analysis Case Study,” where you will find data on the expenses, revenue, and inpatient product lines at Jiranna Healthcare.

Analyze the data and prepare a 3- to 4-page report. In your report, address each of the five following questions. In each case, show the calculations that you conducted to answer the question. Then, explain your conclusion and how your calculations support your reasoning.

• What was the hospital’s original profit forecast (assume away any issues with depreciation, taxes, etc.)? Halfway through the fiscal year, what is the hospital’s revised projection for FY11 profits?
• Which inpatient service lines are over budget? Which inpatient service lines are over budget after accounting for workload increases?
• What two actions would you recommend be taken at the mid-year point if you oversaw a fee-for-service hospital? In other words, where are the problem areas on which you would focus your attention, and who might provide ideas for “best practices” based on their performance?
• What two actions would you recommend be taken at the mid-year point if you oversaw a capitated hospital? In this case, the revenue spreadsheet would be replaced with an overall budget of $50 million with which to operate (rather than being able to bill for each episode of patient care). Federal, state, county, and city hospitals normally operate under a capped budget. Additionally, many HMOs also operate under a fixed per member, per month (PMPM) capitated process.

  Inpatient

  Inpatient Product Line Budget(FY10) Actual (FY10)

  IP Expenses (FY10)

  Forecasted (FY11)

  FY11 Budget (FY10+6% Inflation) Actual (FY11)

  Actual IP Expenses (FY11 YTD)

  CIRC 5,475.81$ 690 3,778,309$ 724 4,202,356$ 421 2,472,822$ DIGEST 5,476.81$ 1,105 6,051,875$ 1,161 6,737,188$ 636 4,356,173$ ENT 5,477.81$ 124 679,248$ 130 754,842$ 72 462,822$ GYN 5,478.81$ 208 1,139,592$ 219 1,268,947$ 116 777,322$ MENTAL HEALTH 498.78$ 1,287 641,930$ 1,351 714,283$ 736 400,730$ NERVOUS 5,478.81$ 217 1,188,902$ 228 1,324,119$ 112 675,173$ NEWBORN 5,478.81$ 698 3,824,209$ 733 4,256,926$ 433 2,971,020$ OB 5,478.81$ 1,430 7,834,698$ 1,501 8,717,115$ 868 5,472,892$ ORTHO 5,478.81$ 601 3,292,765$ 631 3,664,557$ 274 1,771,063$ OTHER 5,478.81$ 2,050 11,231,561$ 2,152 12,497,823$ 800 4,662,277$ RESP 5,478.81$ 645 3,533,832$ 677 3,931,704$ 197 1,233,771$ Total Inpatient Expenses 43,196,922$ 9,506 48,069,860$ 4,664 25,256,062$

  Jiranna Healthcare Expenses Worksheet, Mid-Year Review

   

   

  Inpatient

  Inpatient Product Line ForecastedFor FY11 Projected IP Revenue

  For FY11 Actual

  (FY11 YTD) Actual IP Revenue

  (FY11 YTD)

  CIRC 724 4,351,711$ 421 2,530,676$ DIGEST 1,161 6,988,125$ 636 3,830,402$ ENT 130 780,215$ 72 433,948$ GYN 219 1,313,983$ 116 697,128$ MENTAL HEALTH 1,351 679,539$ 736 369,949$ NERVOUS 228 1,391,632$ 112 682,744$ NEWBORN 733 5,141,782$ 433 3,033,900$ OB 1,501 8,576,189$ 868 4,960,622$ ORTHO 631 3,839,118$ 274 1,664,658$ OTHER 2,152 12,951,037$ 800 4,813,961$ RESP 677 4,142,380$ 197 1,202,960$ Total Inpatient Earnings 9,506 50,155,710$ 4,664 24,220,949$

  Jiranna Healthcare Revenues Worksheet, Mid-Year Review

  Price

  6,010.65$ 6,021.65$ 6,001.65$ 6,013.65$

  502.99$ 6,103.65$ 7,014.71$ 5,713.65$ 6,084.18$ 6,018.14$ 6,118.73$

   

   

  Product Line MDC Description CIRC Diseases and Disorders of the Circulatory System DIGEST Diseases and Disorders of the Digestive System ENT Diseases and Disorders of the Ear, Nose, Mouth, and Throat GYN Diseases and Disorders of the Female Reproductive System MH Mental Diseases and Disorders MH Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental Disorders NERVOUS Diseases and Disorders of the Nervous System NEWBORN Newborns and Other Neonates with Conditions Originating in Perinatal Period OB Pregnancy, Childbirth, and the Puerperium ORTHO Diseases and Disorders of the Musculoskeletal System and Connective Tissue OTHER Unknown OTHER Diseases and Disorders of the Eye OTHER Diseases and Disorders of the Hepatobiliary System and Pancreas OTHER Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast OTHER Endocrine, Nutritional and Metabolic Diseases and Disorders OTHER Diseases and Disorders of the Kidney and Urinary Tract OTHER Diseases and Disorders of the Male Reproductive System OTHER Diseases and Disorders of the Blood, Blood Forming Organs, Immunological Dis OTHER Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasm OTHER Infectious and Parasitic Diseases, Systemic or Unspecified Sites OTHER Injuries, Poisonings and Toxic Effects of Drugs OTHER Burns OTHER Factors Influencing Health Status and Other Contacts with Health Services OTHER Multiple Significant Trauma OTHER Human Immunodeficiency Virus Infections RESP Diseases and Disorders of the Respiratory System

  Academic Writing Expectations Checklist

  The faculty Assessor will use this checklist to evaluate whether your written responses adhere to the conventions of scholarly writing. Review this checklist prior to submitting your Assessment to ensure your writing follows academic writing expectations. Click the links to access Writing Center resources:

  Sentence-Level Skills

  |_| Constructing complete and correct sentences Note: See an explanation of sentence components and how to avoid sentence fragments and run-ons.

   

  |_| Using and spelling words correctly Note: See a list of commonly misused words and information on MS Word’s spell check.

  |_| Using punctuation appropriately Note: See the different types of punctuation and their uses.

  |_| Using grammar appropriately Note: See a Grammarly tutorial to catch further errors.

  Paragraph-Level Skills

  |_| Using paragraph breaks Note: See a description of paragraph basics.

  |_| Focusing each paragraph on one central idea (rather than multiple ideas) Note: See an explanation of how topic sentences work.

  Use of Evidence

  |_| Using resources appropriately Note: See examples of integrating evidence in a paper.

  |_| Citing and referencing resources accurately Note: See examples of citing and referencing resources in a paper.

  |_| Paraphrasing (explaining in one’s own words) to avoid plagiarizing the source Note: See paraphrasing strategies.

  Formatting Written Assignments

  |_| Using appropriate APA formatting, including title page, margins, and font Note: See APA overview and APA template from the Writing Center.

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