Question 1
A pro forma financial statement is a kind of financial statement which is referenced from an organization’s predictions on its market trends, while considering other related factors which will affect the trends. This kind of statement can be seen in the form of several accounting statements such as balance sheets, income and cash flow (Accounting Coach, n.d). In healthcare, pro forma financial statements are used in determining whether a project will be subjected to approval. This can be seen through the several records collected by the Finance department of hospitals wherein accounting records can be found, which eventually stores the records of the fundings of the approved projects; the costs of which are found reasonable with the purpose and the requirements. Examples of projects include the Meditech Information System and the New Medical Office Building, both found in the University of Carolina Hospitals (Harrison & Ray, 2011). Both projects are funded through proceedings made by several pro forma financial statements, including the statement of assets, revenues, expenses, and possible changes in net worth of assets (Harrison & Ray). To put it simply, these structures are built considering the flow of profits and expenses made by the hospital at regular basis.
Question 2
The budget allocated for healthcare is focused on improving the projects which are currently functional, as well as for future improvement and development of the sector. According to Campobasso, Kucharz, and O’Keefe (2009), the funds come from several sources such as bank loans, charities, profits from hospital operations, bonds, and savings. Moreover, the goal of the projects must adhere the concerns of the different sectors of the society, such as the market and economy, the government, the public, and technology (Campobasso, Kucharz, and O’Keefe, 2009). Some examples of the expenses, which focuses on the previously mentioned areas, are the improvement of the facilities and equipment, the salaries of the hospital workers, medical supplies, hospital investments, as well as several hospital operations such as patient care, emergency operations, birth delivery, patient confinement, and discharge, and other services typically offered in American hospitals (Harrison & Ray, 2011). In general, what the hospitals wanted is innovation; to improve the services and increase patient satisfaction. A specific example of this innovation is the University of North Carolina Hospital, where it spent $48 million on equipment, $6 million for computers and upgrades, and $36 million for the facility improvement and renovation (Harrison & Ray, 2011).
Question 3
in the current condition of the American society, the high necessity to increase the expenditure on health care is significantly evident due to the spending of the Gross Domestic Product, or GDP on health care needs and requirements (Office of the Assistant Secretary for Planning and Evaluation [OASPE], n.d). Though at first glance this would seem to be a good move for the government, the problem about the unbalanced allocation for health care, however, is that the other sectors are negatively affected, and the main reason to which is the allocation of the GDP shares extend even outside the hospital premises, in the form of health insurance. As a consequence, the economy greatly suffers from the misallocation, which will eventually result to government actions such as the increase on taxes, the decrease on employment and job offerings, and inflation. This is because the poor allocation will decrease the competitive nature of the United States market in the international scene. On the other hand, the positive effect can still be seem in the projected increase on the productivity of the US population, due to the high quality of health care (OASPE, n.d).
Moreover, other sectors of the economy will also be affected as well on the increased allocation of health care, and the most to be affected will be the regular employees. This is because the increased spending will give the employees a more difficult time to save money for the future. As such, other benefits, particularly the retirement and other life plans cannot be sustained well in the present because the employees need to prioritize their earnings to one of the most needed services in the society, and that is health care (OASPE, n.d).
As such, the Americans must not continue to increase the spending on health care. It is not that health care is not important; however, just a sufficient amount will assure the quality of health care and there will be no need to spend more money. This is because the opposite will happen, as people will increase their debts and the other necessities, such as food, water, electricity and jobs will be neglected (OASPE, n.d).
Question 4
4-1.
Stealing the market shares of other service providers will help in improving the inpatient services of the RHMC because of the abundant resources that can be obtained from doing this strategy. However, this strategy will only be effective in the short run. Once the service providers learned about the stealing, doubt will sure surface between RHMC and the service providers. As a result, the support coming from the service providers will significantly decrease due to trust issues. Also, the strategy incorporated with the stealing of the market shares will not last long enough to produce the same profit over a long period of time. Patients might come all the time, but certain diseases only emerge seasonally, and not all year round. If the strategy heavily focuses on a certain disease that occurred during the dwindling period, then the whole hospital is at risk in possible reduction of profits and returns.
4-2
Though it is not a bad idea to explore the services which are not typically served in the health care facility of RHMC, it is still important to consider the following factors. First, consider if the facility is capable enough of the new service. Determine if the facility satisfies the requirements, or if not, the alternative methods which can effectively deliver the services. The second one is to determine if the workers are capable enough. Know if someone actually has an expertise on the new service. Finally, consider the customer satisfaction. Predict outcomes if possible. Determine if the new services that will be offered is competitive enough with the other facilities. Overall, it is important to consider the quality of the services, especially if they are a part of the expansion of the services of the healthcare facility. This is in order not to waste the resources allocated for exploring the said services.
4-3
This one is actually difficult to achieve, but all the worth if RHMC is able to successfully pull it off. There are several things to be done, specially in the benefits of the physicians, both the additional and the regular ones. Adding physicians to the workforce will not be a problem if the benefits offered by the RHMC is reasonable and the physician gladly accepts the offer. However, what is more difficult is to convince exclusive practice of the other physicians in the hospital. These people works in multiple hospitals not only because they receive greater benefits and opportunities, but also, they needed to work on more patients in order to receive more incentives and earnings. However, hospitals have different environment and population surrounding the facility, so cases are entirely different from one hospital to another. Increasing the benefits of these physicians will possibly increase their working time in the hospital, but one cannot really tell about their exclusive practice at RHMC.
References
Accounting Coach. (n.d). What are pro forma financial statements? AccountingCoach, LLC. Retrieved 8 August, 2016, from http://www.accountingcoach.com/blog/pro-forma- financial-statements
Campobasso, F., Kucharz, J., and O’Keefe, M. (2009). Managing Capital Project Risks
in a Challenging Environment: What Health Care Boards and Executives Need to Know. Center for Healthcare Governance.
Harrison, R., and Ray, J. (2011). Embracing the Future of Health Care. University of North Carolina Health Care System.
Office of the Assistant Secretary for Planning and Evaluation. (n.d). The Effect of Health Care Cost Growth on the U.S. Economy. United States Department of Health and Human Services.
