HMP 5710-01 & HMP 5701-02

Financial Aspects of
Healthcare
Week 11 Case Study
November 5, 2018
Steps of Financial Plan Development
• Assess the financial position and prior growth patterns
o Need to review 3-5 years of financial statements
o Need to conduct a ratio analysis
• Define Growth needs in total assets for the planning period
o Forecasting revenues and expenses is a prerequisite to forecasting asset growth
o Accomplished through forecasted income statements
• Define acceptable level of debt for both current and long-term categories
o Debt should not be used as a balancing variable
o If debt plan cannot be achieved the board must reduce assets or increase risk
• Assess reasonable ness of required growth rate in equity
o Can results be achieved (are assumptions realistic)?
o Are the projected financial results acceptable?
Financial Planning Relationships and
Sequencing
• Shows present and projected revenue
o Basis for projecting required level of
investment or assets

• Here the organization expects it will

need one dollar of investment to drive
one dollar of income

• Must Establish a debt policy – here the

policy is only 50% of assets can be
acquired through debt

• If balance sheet does not balance, then

need to adjust assets or increase debt
 Task
Within your assigned group, collaborate based upon your review of the
Omega Health Foundation (OMF) Financial Statements and Financial
Ratios (pages 315 – 324):
-Articulate your understanding of OMF’s current financial position and
why
-Articulate your recommendation regarding OMF’s growth rate in assets
and why