Health Care Essay

1426 words - 6 pages

Statement of ProblemHCA, after following a conservative financial policy since its establishment, has entered the new decade preparing to make some changes in order to realign their financial strategy and capital structure. Since establishment, HCA has often been used as a measure for the entire proprietary hospital industry. Is it now time for the market to realign their expectations for the industry as a whole? HCA has target goals which need to be met in order to accomplish milestones in the future. The problem arises as to which area holds priority to the company. HCA must decide how the key components of their financial strategy and policy should my approached in order to meet their future goals.BackgroundHCA has set target goals in several areas and it is important to identify which goals hold priority: Debt Ratio, Growth Rate, ROE, and Bond Rating.Debt Ratio:Currently, HCA is approaching an all time high debt ratio of 70%, well above their established target ratio of 60%. The increase in debt ratio has attracted the attention of rating agencies who have clearly stated that in order for HCA to maintain their A bond rating HCA must return to their 60-40 capital structure. Now the question arises as to whether the A rating should be sought or should HCA move to a less conservative position. Some investors believe that a more aggressive use of leverage would present greater opportunities in the future. Others feel that with changes in Medicare/Medicaid reimbursement structure on the horizon, HCA should remain conservative. In order to decrease the debt ratio, HCA would have to 1) decrease the growth rate (inadvertently decreasing ROE) or 2) decrease debt/increase equity. The debt ratio is important for many reasons, but it should not be the basis of a company's future. The market will ultimately decide the value based on numerous facts, not just the bond rating.Growth Rate:HCA would like to see the annual growth rate in the 25-30% range, although they have also set a minimum of 13%. This would signal aggressive action in the company and with this growth rate HCA would experience a dramatic increase in ROE as well as leverage. Why would HCA want to take on a debt ratio of 86% (See Case Exhibit 1)? Vice President Bill McInnes believes that in order for HCA to compete with other management companies in the industry they must continue acquisitions. An increasing growth rate does appeal to the investors, but is it necessary to take on this kind of risk when uncertainties lie in the future. More importantly, there is evidence that increasing growth does not necessarily make you more profitable. Humana's growth in hospitals over the past 5 years is 6.80%, that's almost a quarter of HCA's at 30.1%, yet they realized a growth in net income of 54.60%. HCA on the other hand only realized a growth in net income of 32.40%(Case Exhibit 2). Hence the growth rate is not a sole determinate of future performance. In addition, a company certainly wants to allow...

Find Another Essay On health care

Health Care Essay

2159 words - 9 pages to the streets in Montpelier, Vermont, outside the capital, to protest Act 48. In May of 2011 Vermont passed Act 48, which put the state on the path towards implementing a universal and unified health care system that covers all Vermonters. PLAY FOOTAGE OF PROTESTORS OUTSIDE CAPITAL O’Reilly: The Act, which was made in compliance with the Affordable Care Act, went into place in the beginning of this year. The tyranny of King Obama has stretched

Palliative Care in Health Care Essay

829 words - 3 pages I have been a registered nurse at UCLA for 18 months. One particular issue that has captured my attention is the utilization of palliative care in health care. Because nurses are generally at the bedside all the time, they have an important role to play in voicing the importance of its utilization and implementation in the patient’s care. In 2003, the American Nurses’ Association published a position statement regarding “Pain Management and

Health Care IT and Quality Health Care

1321 words - 6 pages 1.0 Introduction The interpretation of quality health care varies with each person. Some place emphasis on the ability to access various treatments without interference. Others value the feature of being able to simply select one’s provider. Quality health care, according to the Institute of Medicine (2001), can be defined as care that is “safe, effective, patient-centered, timely, efficient and equitable” (p. 3). Furthermore, it should

Lowering Health Care Costs

1112 words - 5 pages Health care expenditures is an increasing proportion of gross domestic product (GDP) in Organization for Economic Cooperation and Development countries as its share in GDP increased by an average of nearly 2 percent annually in last 40 years. Health care expenditures in the US increased 6.2 on average annually between 1991 and 2011. Health care spending consisted 17.9 percent of GDP in the US in 2011. There are many elements affecting increases

Health care reform

970 words - 4 pages The Great Bipartisan Reformation"If it ain't broke, don't fix it" is a phrase often used to justify a lack of change. It is senseless to "fix" something that is not necessarily "broken." Although this maxim generally proves to be true, it certainly does not apply to the United States health care system, which is clearly broken. The only solution to fixing the health care system is to make changes. The United States health care system should be

American’s Health-Care Crisis

1111 words - 5 pages INTRODUCTION The health care system in the United States encompasses so many individuals, businesses, and interest groups. Also, it can be difficult to pinpoint the most optimal approach to serve everyone’s unique needs and wants. This has led to a major health-care crisis in the society. As a matter of fact, the effect of the health-care crisis in the American society has been a longtime situation, and an effective policy

Managed Health Care Analyzed

1843 words - 7 pages The health care industry in the United States is very diverse and dynamic. The continued growth of managed health care is influenced by the economy, the need, and the regulatory regulations set forth on the industry. If one of these forces changes, it can affect the entire group; this causes the managed health care industry to be at the mercy of its roots and the industry’s need for it. What started out as a simple idea has turned into a complex

Canadian health care

586 words - 3 pages Canadian Health Care System Overview Canada's health care system is a gathering of standardized health protection arranges that gives scope to all Canadian subjects. It is openly financed and controlled on a commonplace or regional foundation, inside rules set by the central government. Under the Canadian health care system, distinct subjects are given protection consideration and therapeutic medications from essential forethought M.d.s and

Health Care Reform

733 words - 3 pages Obama Care is a controversial health care plan that has been developed during the Obama Presidential Occupancy. The health care plan is designed to provide universal health care for all Americans. The law was signed by the president in March of 2013 and then by the Supreme Court in June of 2013. The status quo of the United States depicts Americans without health insurance, unable to afford health care, or with health care plans that don't fully

New Health Care System

1308 words - 5 pages One of the major problems nagging America is the need for a new health care system. The number of uninsured Americans needing medical treatment is rising. Medicare, a major part of the American health care system, is projected to go broke in 2019 according to USA Today's article, "Congress refuses to swallow cures for ailing Medicare." I have seen this ruin people's pursuit of happiness. I worked in a nursing home for the past five years

The Health Care System

660 words - 3 pages Have you ever had a time in your life where you have had to go to the doctor? If so then even you have had experience with the health care system. In this paper we are going to explain all about the health care system. First we will explain exactly what the problem is with our health care program. From there we are going to go into exactly how we would solve this problem and improve the entire system. After that since nothing is

Similar Essays

Health Care Essay

1340 words - 6 pages Racial disparities in The United States health care system are widespread and well documented. Social and economic inequalities between racial minorities and their white counter parts have lead to lower life expectancy rates, higher infant mortality rates, and overall poorer health for people of color. As the nation’s population continues to become increasingly diverse, these disparities are likely to grow if left unaddressed. The Affordable

Health Care Essay

1669 words - 7 pages Lily Leung once stated, “When in doubt, choose change” (1), which reflected how Canada’s actions in terms of the changes that were happening from the 1960s- 1990s, specifically the medical industry. Prior to World War II, health care in Canada was privately delivered and funded. A universal hospital care plan was being introduced in the 1950s, which signified positive changes among Canadians. The time period between 1960’s to the 1990’s

Health Care Essay 1253 Words

1253 words - 6 pages In our world, each country has a set criterion to follow in order to establish health care for people in different societies. The way the resources are allocated, and the standard of health care delivered, varies from country to country. When you think about health care services around the world, there are so many diverse countries that run health care in different ways. Comparing the United States to other countries such as Canada and Poland is

Health Care Essay 1475 Words

1475 words - 6 pages In the world of health care there are multiple factors that affect the quality of treatment. One of the most debated subjects is religion. As all religious traditions tend to be complex and go for some length of time special care must be considered for the patient, family and care team. Through the years, the United States health care evolves with the changing demographics to develop an ethical treatment for Muslims in healthcare. Facing