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This Assessment considers a Capital Proposal Case Study to add a specialized nurse triage center, an offsite center that would be staffed by registered nurses with a multitude of specialties, including emergency department (ED) nurses, critical care, surgical, and even some nurse practitioners. These nurses are able to offer callers medical advice encompassing the treatment of fevers, wound care, and emergent conditions, such as chest pain. The nurses are trained to triage conditions to the appropriate level of care, be that at home, at an urgent care center, or at the ED.

This assessment has three-parts. Click each of the items below to complete this assessment.


Part I: Analyze Organizational Financial Data

· For this part of the Final Assessment, you will conduct a 5-year analysis of Jiranna Healthcare’s outpatient operational and financial data in order to determine whether or not the capital project is an attractive project. Refer to “Jiranna Finances” for financial statements to analyze.

· Prepare a 2- to 3-page financial analysis including a supporting Excel spreadsheet to show your work. The focus must be on the content and the depth of your analysis. Unless otherwise indicated, a 5-year trend analysis is expected.

· Complete your analysis as follows:

· Calculate the 5-year net sales, operating expenses, operating income, and net income of Jiranna Healthcare. Once the 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 the 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 the 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 the 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 the capital project to Jiranna Healthcare? Explain the rationale for your decision.


Part II: Conduct an Operating Indicator Evaluation

· For the next part of the Final Assessment, 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 calculation using current technology like Excel Workbook, 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.” Then, complete the “Capital Project Case Study Spreadsheet”, which provides cash-flow data (costs and benefits) for the proposal. Download and save the Excel spreadsheet in your working Excel Workbook, and use the information provided to complete the following:

· Calculate the cash inflows and outflows for each year.

· Evaluate the capital project by calculating 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 including a supporting Excel spreadsheet to show your work, provide your recommendation with rationale, as to whether the project is acceptable, assuming Jiranna Healthcare 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: Conducting 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 outpatient product lines at Jiranna Healthcare.

· Analyze the data and prepare a 3- to 4-page report including a supporting Excel spreadsheet to show your work. 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 Jiranna’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 outpatient service lines are over budget? Which outpatient 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 healthcare organization? 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 healthcare organization? 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 healthcare organization normally operate under a capped budget. Additionally, many HMOs also operate under a fixed per member, per month (PMPM) capitated process.

Capital Project Case Study

This case study considers the expected costs and benefits to Jiranna Healthcare resulting from a decision to design a centralized nurse triage line. This triage line would assist Jiranna patients in providing self-care and/or with seeking care at an urgent care facility in lieu of more expensive after-hours care in the emergency room.

Summary

Jiranna Healthcare’s main facility is home to more than 80 onsite specialty and surgery clinics, employing over 5,000 staff. In addition to the main hospital, Jiranna Healthcare has 11 satellite clinics, which can contain healthcare services, such as pediatrics, family medicine, and mental health etc. These facilities (the hospital plus outlying clinics) serve a total enrollee population of 97,000.

Currently, Jiranna Healthcare’s centralized call center schedules patient appointments for each of the 11 satellite clinics, handling an average of 1,500 to 2,000 calls daily with a staff of 20. Patients routinely have difficulty obtaining urgent or acute care in a timely fashion. Additionally, in three out of four cases, the majority of Jiranna Healthcare’s healthcare centers are unable to meet access standards. These access issues have a secondary effect on the call center, which experiences a much higher call rate because members have to call back multiple times to find available appointments. The existing process leads to overutilization of emergency departments for urgent care and non-emergent concerns. In addition, patient satisfaction has steadily declined as a result of the continued lack of access to healthcare services.


To address this problem, there is a proposal to implement a centralized nurse triage line, an offsite phone center that would be staffed by registered nurses with a multitude of specialties, including emergency room (ER) nurses, critical care, surgical, and even some nurse practitioners. These nurses are able to offer callers medical advice encompassing the treatment of fevers, wound care, and emergent conditions, such as chest pain. The nurses are trained to triage conditions to the appropriate level of care, be that at home, at an urgent care center, or at an emergency department.

The major cost impact is the increased salary requirement for the phone center staff, which will entail approximately 33 multi-discipline employees, based on workload and enrollment data. Additional elements of the proposal include hiring an information technology (IT) specialist to manage the triage line’s computer system and facility renovations. The main benefit of this proposal is the projected cost reductions in patient care as a result of moving non-emergent care out of the expensive emergency-room setting.

Assignment

The “Capital Project Case Study, Part 2” spreadsheet provides cash flow data (costs and benefits) for the proposal. Download and save this Excel spreadsheet in your working Excel Workbook, and use the information provided to complete the following:

1. Calculate the cash inflows and outflows for each year.

2. Evaluate the capital project by calculating the following metrics:

a. Net present value (NPV)

b. Internal rate of return (IRR)

c. Modified internal rate of return (MIRR)

d. Payback period

e. Discounted payback period

3. In a 1- to 2-page report, provide your recommendation with a rationale, as to whether the project is acceptable, assuming Jiranna Healthcare 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.

© 2020 Walden University 1

Income Statement

Jiranna Healthcare Income Statement December 31, 2013 (in thousands)
2009 2010 2011 2012 2013
Gross patient services revenues (non-GAAP) 8,870 9,490 10,400 11,200 12,050
Less deductions from revenues (non-GAAP) (780) (890) (1,000) (1,500) (1,600)
Net patient service revenues 8,090 8,600 9,400 9,700 10,450
Other operating revenues 519 633 679 717 980
Total operating revenues 8,609 9,233 10,079 10,417 11,430
Operating expenses
Salaries and wages 5,497 5,678 5,890 6,170 6,800
Supplies 823 850 855 890 905
Utilities 558 576 590 595 620
Insurance 44 46 49 54 70
Depreciation 168 173 175 178 188
Interest 142 146 154 179 198
Bad debts 363 375 400 455 500
Other operating expenses 987 1,299 1,560 1,300 1,350
Total operating expenses 8,582 9,143 9,673 9,821 10,631
Operating income 27 90 406 596 799
Nonoperating income 154 195 245 220 290
Excess of revenue over expenses $ 181 $ 285 $ 651 $ 816 $ 1,089
Change in net assets
Unrestricted $ 181 $ 285 $ 651 $ 816 $ 1,089
Temporarily restricted
Permanently restricted
Total change in net assets 181 285 651 816 1,089

Balance Sheet

Jiranna Healthcare Balance Sheet December 31, 2013 (in thousands)
2009 2010 2011 2012 2013
Current Assets $ 280 $ 124 $ 136 $ 295 $ 355
Cash 30 45 50 75 88
Receivables, net 1,340 1,536 1,700 1,896 2,400
Inventory 140 175 250 276 266
Prepaid expenses 40 32 40 53 78
Total Current Assets 1,830 1,912 2,176 2,595 3,187
Total Assets
Short-term investments 600 1,010 1,200 1,300 1,510
Plant and equipment 6,580 6,780 6,900 7,200 7,500
Less accumulated depreciation -1,660 -1750 -1,800 -1,950 -2,350
Plants and equipment, net 4,920 5,030 5,100 5,250 5,150
Total Assets $ 7,350 $ 7,952 $ 8,476 $ 9,145 $ 9,847
Current liabilities
Accounts payable 370 302 356 370 375
Accrued expenses payable 220 208 212 210 215
Deferred revenues 60 77 87 87 94
Total Current liabilities 650 587 655 667 684
Long-term liabilities 2,400 3,000 3,300 3,500 3,750
Total Liabilities 3,050 3,587 3,955 4,167 4,434
Net assets
Unrestricted 3,000 3,285 3,221 3,678 4,113
Temporarily restricted 700 700 700 700 700
Permanently restricted 600 600 600 600 600
Total Net Assets 4,300 4,585 4,521 4,978 5,413
Total Liabilities and Net Assets 7,350 8,172 8,476 9,145 9,847

Cash Flows

Jiranna Healthcare Cash Flows, 2013 (in thousands)
Cash Flows from Operating Activities
Cash received from patient and third-party payers $ 10,671
Cash received from operating revenue sources 800
Cash received from nonoperating revenue sources 270
Cash payments to employees (5,600)
Cash payments to suppliers of goods and services (4,800)
Net cash flow from operating activities $ 1,341
Cash flows from Investing Activities
Cash payments for purchase of plant assets (1,200)
Cash payments for purchase of long-term investments (670)
Proceeds from sales of plant assets 80
Proceeds from sale of long-term investments 60
Net cash flow from investing activities (1,730)
Cash flows from Financing Activities
Proceeds from issuance of 6% bonds payable 4,000
Principal payments on long-term debt (300)
Cash payments to retire 7% bonds payable (3,200)
Net cash flow from financing activities 500
Net increase/(decrease) in cash $ 111

Captial Project

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Nurse Triage Salaries $ 523,800 $ 549,990 $ 577,490 $ 606,364 $ 636,682 $ 668,516
Forecasted ER Cost Reductions $ 400,000 $ 800,000 $ 848,000 $ 900,577 $ 955,512 $ 1,013,798
New IT Specialist’s Salary $ 150,000 $ 154,500 $ 159,135 $ 163,909 $ 168,826 $ 173,891
Costs of Facility Renovations $ 30,000 $ – 0 $ – 0 $ – 0 $ – 0 $ – 0
Necessary Capital Equipment Purchases $ 117,000 $ 3,510 $ 3,510 $ 3,510 $ 3,510 $ 3,510
Net Cash Flow:
Present Values of Net Cash Flows:
Net Present Value:
Internal Rate of Return (IRR):
Modified Internal Rate of Return (MIRR):
Payback Period (# years):
Discounted Payback Period (# years):

Variance Analysis Case Study

Jiranna Healthcare
Expenses Worksheet, Mid-Year Review
Outpatient
Outpatient Product Line Unit Expense (FY10) Actual Units (FY10) Total OP Expenses (FY10) Unit Forecast (FY11) Unit Expence (Budget FY11) FY11 Budget (FY10+6% Inflation) Acutal Mid Year Units (FY11) Actual OP Expenses (FY11 YTD)
CARDIOLOGY $ 5,478.81 645 $ 3,533,832 677 $5,807.54 $ 3,931,704 197 $ 1,144,085
ENDOCRINOLOYGY $ 5,478.81 217 $ 1,188,902 228 $5,807.54 $ 1,324,119 112 $ 650,444
FAMILY MED $ 5,476.81 1,105 $ 6,051,875 1,161 $5,802.92 $ 6,737,188 636 $ 3,690,656
GYN $ 5,478.81 208 $ 1,139,592 219 $5,794.28 $ 1,268,947 116 $ 672,136
ENT $ 5,475.81 690 $ 3,778,309 724 $5,804.36 $ 4,202,356 421 $ 2,443,635
MENTAL HEALTH $ 498.78 1,287 $ 641,930 1,351 $528.71 $ 714,283 736 $ 389,128
NEWBORN $ 5,478.81 698 $ 3,824,209 733 $5,807.54 $ 4,256,926 433 $ 2,514,664
OB $ 5,478.81 1,430 $ 7,834,698 1,501 $5,807.54 $ 8,717,115 868 $ 5,040,943
ORTHO $ 5,478.81 601 $ 3,292,765 631 $5,807.54 $ 3,664,557 274 $ 1,591,266
PEDIATRICS $ 5,477.81 124 $ 679,248 130 $5,806.48 $ 754,842 72 $ 418,066
PODIATRY $ 5,478.81 2,050 $ 11,231,561 2,152 $5,807.54 $ 12,497,823 800 $ 4,646,031
Total Expenses $55,281 9,055 $43,196,921 9,507 $58,582 $48,069,860 4,665 $23,201,056
Jiranna Healthcare
Revenues Worksheet, Mid-Year Review
Outpatient
Outpatient Product Line Unit Price (FY10) Actual Units (FY10) Total OP Revenue (FY11) Unit Forecasted For (FY11) Unit Price (Budget FY11) Projected OP Revenue For FY11 Actual (FY11 YTD) Actual OP Revenue (FY11 YTD)
CARDIOLOGY $ 6,118.73 645 $ 3,946,580.85 677 $6,118.73 $ 4,142,380 197 $ 1,205,390
ENDOCRINOLOYGY $ 6,103.65 217 $ 1,324,492.05 228 $6,103.65 $ 1,391,632 112 $ 683,609
FAMILY MED $ 6,021.65 1,105 $ 6,653,923.25 1,161 $6,019.06 $ 6,988,125 636 $ 3,828,120
GYN $ 6,013.65 208 $ 1,250,839.20 219 $5,999.92 $ 1,313,983 116 $ 695,991
ENT $ 6,010.65 690 $ 4,147,348.50 724 $6,010.65 $ 4,351,711 421 $ 2,530,484
MENTAL HEALTH $ 502.99 1,287 $ 647,348.13 1,351 $502.99 $ 679,539 736 $ 370,200
NEWBORN $ 7,014.71 698 $ 4,896,267.58 733 $7,014.71 $ 5,141,782 433 $ 3,037,369
OB $ 5,713.65 1,430 $ 8,170,519.50 1,501 $5,713.65 $ 8,576,189 868 $ 4,959,448
ORTHO $ 6,084.18 601 $ 3,656,592.18 631 $6,084.18 $ 3,839,118 274 $ 1,667,066
PEDIATRICS $ 6,001.65 124 $ 744,204.60 130 $6,001.65 $ 780,215 72 $ 432,119
PODIATRY $ 6,018.14 2,050 $ 12,337,187.00 2,152 $6,018.14 $ 12,951,037 800 $ 4,814,512
Total Revenue $61,604 9,055 $47,775,303 9,507 $61,587 $50,155,711 4,665 $24,224,308
Product Line MDC DescrOPtion
CARDIOLOGY Diseases and Disorders of the Circulatory System (Hypertension, Heart Disease, etc.)
ENDOCRINOLOYGY Diseases and Disorders of the Endocrin System (Diabetes Type 1 & 2, Thyroid Disorders, etc)
FAMILY MED Family Primary Care and Disease Preventative Services
GYN Diseases and Disorders of Women’s Reproductive Health
ENT Diseases and Disorders of the Ear, Nose, Mouth, and Throat
MENTAL HEALTH Mental Diseases and Disorders
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
PEDIATRICS Pediatric Primary Care and Disease Prevention Services (0 – 18 years)
PODIATRY Diseases and Disorders of the Feet and Lower Limbs

© 2021 Walden University, LLC 1

FM007: Analyze Financial Data: Make recommendations for organizational decisions based on analyses of
financial data.

Assessment Rubric

Rubric Criteria

Needs Improvement

Meets Expectations

Exceeds Expectations
Part 1: Analyze Organizational Financial Data
Learning Objective
1.1:

Calculate and interpret
net sales, operating
expenses, operating
income, and net
income data to
determine significance
of trend result.

Analysis does not include or
includes an incomplete or
inaccurate calculation of the 5-
year net sales, operating
expenses, operating income, and
net income.

Analysis does not include or
includes an inaccurate, unclear,
or incomplete interpretation of the
data and/or explanation of the
significance of the trend result.

Analysis accurately calculates
the 5-year net sales,
operating expenses,
operating income, and net
income.

Analysis accurately interprets
the data and effectively uses
it to explain the significance of
the trend result.

Analysis demonstrates the
same level of achievement
as “Meets,” plus the
following:

Analysis includes an
explanation of the
significance of the trend
results including detailed
examples or illustrative
graphics.

Learning Objective
1.2:
Calculate and interpret
profit margin, asset
turnover, return on
assets, and return on
net worth data to
assess a company’s
profitability.

Analysis does not include or
includes an incomplete or
inaccurate calculation of the 5-
year total profit margin, asset
turnover, return on assets, and/or
return on net worth.

Analysis does not include or
includes an inaccurate, unclear,
or incomplete interpretation of the
data and/or explanation of the
company’s profitability.

Analysis accurately calculates
the 5-year total profit margin,
asset turnover, return on
assets, and return on net
worth.

Analysis accurately interprets
the data and uses it to assess
the company’s profitability.

Analysis demonstrates the
same level of achievement
as “Meets,” plus the
following:

Analysis provides
additional context for
these calculations by
comparing them to other
healthcare organizations
or figures for the industry.

© 2021 Walden University, LLC 2

Rubric Criteria

Needs Improvement

Meets Expectations

Exceeds Expectations
Learning Objective
1.3:
Calculate and interpret
current ratio, day’s
cash on hand, and
working capital data to
evaluate a company’s
liquidity.

Analysis does not include or
includes an inaccurate or
incomplete calculation of the 5-
year current ratio, day’s cash on
hand, and/or working capital.

Analysis does not include or
includes an inaccurate or unclear
interpretation of calculations to
evaluate the company’s liquidity.

Analysis accurately calculates
the 5-year current ratio, day’s
cash on hand, and working
capital.

Analysis accurately and
clearly interprets the data in
order to explain the
company’s liquidity.

Analysis demonstrates the
same level of achievement
as “Meets,” plus the
following:

Analysis provides
additional context for
these calculations by
comparing them to other
healthcare organizations
or figures for the industry.

Learning Objective
1.4:
Calculate debt ratio
and times interest
earned ratio to
evaluate a company’s
long-term solvency.

Analysis does not include or
includes an inaccurate or
incomplete calculation of the 5-
year debt ratio and times interest
earned ratio.

Analysis does not include or
includes an inaccurate or
incomplete interpretation of
calculations to evaluate the
company’s long-term solvency.

Analysis accurately calculates
the 5-year debt ratio and
times interest earned ratio.

Analysis accurately and
clearly interprets the data in
order to explain the
company’s long-term
solvency.

Analysis demonstrates the
same level of achievement
as “Meets,” plus the
following:

Analysis provides
additional context for
these calculations, by
comparing them to other
healthcare organizations
or figures for the industry.

Learning Objective
1.5:
Conduct a DuPont
analysis to determine
the organization’s
DuPont characteristics
and trends across an
analysis period.

Analysis does not include or
includes an inaccurate DuPont
analysis for each of the five years
or the analysis is only provided
for some of the five most recent
years.

Analysis accurately applies a
DuPont analysis for each of
the five years.

Analysis accurately and
clearly interprets the
company’s individual DuPont
characteristics and trends.

Analysis demonstrates the
same level of achievement
as “Meets,” plus the
following:

Analysis provides
additional context for
these calculations, by

© 2021 Walden University, LLC 3

Rubric Criteria

Needs Improvement

Meets Expectations

Exceeds Expectations
Analysis does not include or
includes an inaccurate or unclear
interpretation of the company’s
DuPont analysis characteristics
and trends.

comparing them to other
healthcare organizations
or figures for the industry.

Learning Objective
1.6:
Make
recommendations for
management
decisions based on
evaluation of financial
information.

Analysis does not include or
includes an unclear
recommendation for or against
the proposal to add a centralized
nurse triage line of business.

Analysis does not include or
includes an unclear or incomplete
rationale supporting the
recommendation for or against
the purchase or the data cited in
the rationale is irrelevant or
unclear.

Analysis includes a
recommendation for or
against the proposal to add a
centralized nurse triage line of
business.

Analysis includes clear and
logical rationale supporting
the recommendation and data
is used to support the
recommendation.

Analysis demonstrates the
same level of achievement
as “Meets,” plus the
following:

Analysis provides
additional rationale for this
recommendation by
comparing this company’s
data to industry
benchmarks.

Rubric Criteria

Needs Improvement

Meets Expectations

Exceeds Expectations
Part 2: Conducting an Operating Indicator Evaluation
Learning
Objective 2.1:
Apply mathematical
principles to
accurately calculate
cash inflows and
outflows.

Report does not include or
includes an inaccurate or
incomplete calculation of cash
inflows and cash outflows or
response is not relevant to the
case presented.

Report accurately calculates the
cash inflows and outflows for
each year in the case
presented.

Report demonstrates the
same level of achievement
as “Meets,” plus the
following:

Report prov