Expert answer:Capital Decisions

Solved by verified expert:Evaluating financial statements and using financial analysis methods is a critical part of the decision to make capital investments. The goal of capital management is to acquire and maintain sufficient working capital and assets. This helps an organization meet operating and expense obligations, while also keeping a sufficient cash flow. It is also a way to confirm that capital purchases and agreements are made with ethical standards. This part of your project will require you to complete two (2) article reviews(PLEASE LET ME KNOW IF YOU ARE UNABLE TO OPEN THE LINKS) and report on your findings. Then, you will apply your findings to how capital decisions can be made in your specific case***SEE ATTACHED**; as well as comparing your viewpoint to the authors’ and recent ethical scandal. Keep in mind that you will use your article analysis to either support or disprove the purchase of an information system in the final portion of your project.Submit a minimum 3-page report in APA FORMAT WITH A REFERENCE PAGE that:Discusses why is it more difficult for healthcare companies to get expansion financing in the today’s economic climate and financial issues with expansions.Describes why healthcare companies need to look beyond their banks to secure financing.Explains the importance of making a good case for expanding healthcare providers’ methods of calculating break-even analysis.Discuss non-financial factors do the authors believe need to be included in break-even analysis?Explain how current issues, such as the Affordable Care Act, affect break-even analysis.Summarizes the authors’ viewpoints and apply the concepts to your case. Also include a summary of your viewpoint in comparison to the authors’. Be sure to specifically address the methods that influence capital investments and decision-making; and explore methods of analyzing capital investments (Payback, Net Present Value, and Internal Rate of Return). This report will serve as your Capital Management section of your project.Analyze the key points of the Enron Scandal and specifically address how professionalism and ethics influence decision-making. How do unethical standards impact an organization’s performance and capital investments? Reference the concepts of embezzlement and losses. Explain how you maintain ethical standards in relation to Code of Ethics.Include an APA formatted reference page to include at least three (3) academic sources, such as a book or an academic scholarly journal, to support your topic. You should reference your academic sources by including at least three (3) in-text citations. You can use the articles outlined in the instructions, as well as information found on the Enron Scandal. Academic scholarly journals can be accessed through the Rasmussen Online Library.Article Review #1Read the article Expanding Credit Lines in Order to Expand which discusses the challenges related to expansion financing.Discuss why is it more difficult for healthcare companies to get expansion financing in the current economic situation?Explain the 2 major issues with the Caribbean expansion the turnaround company found and why do you think they were brought up?Describe why healthcare companies need to look beyond their banks to secure financing?Article Review #2Read the article The New Break-Even Analysis which looks at expanding how healthcare providers look at break-even analysis and includes some non-financial considerations.Do you think the authors make a good case for expanding healthcare providers’ methods of calculating break-even analysis? Why or Why Not?Discuss non-financial factors do the authors believe need to be included in break-even analysis?Explain how the Affordable Care Act affect break-even analysis?Ethical ScandalThe ‘Enron Scandal’ involving acts of embezzlement is one of the most well-known financial, ethic scandals in modern day history. Perform a web search of the Enron Corporation Scandal to find more information.
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CASE STUDY:
Interim Chief Financial Officer Case Study:
Trinity Mother Frances Health System: Tyler, Texas
Warbird provides customized healthcare finance team, including an interim CFO, to help
leading health system move forward with key financial initiatives
The Opportunity
Recognized as a leader in quality and rated as the number one hospital in the state of Texas
for patient safety, Trinity Mother Frances Health System in Tyler was in need of financial
leadership after the retirement of its long-time CFO. Trinity had embarked on the
construction of a heart hospital and the installation of the EPIC electronic information
system yet days of cash-on-hand was strained and the organization was not prepared to
enter the bond market for financing.
The Solution
Lindsey Bradley, president and CEO of Trinity, turned to Warbird Consulting Partners.
Working with Warbird, Trinity was able to engage a customized team of healthcare finance
experts that included an interim chief financial officer through Warbird’s Healthcare CFO
Consulting Network, as well as key financial staff through Warbird’s On-Demand Services.
In addition to interim CFO Pamela Vukovich, a healthcare finance expert with more than 29
years’ professional experience, including 11 years as a chief financial officer, Warbird also
provided seasoned interim professionals to serve as internal audit director, tax manager
and director of physician services, as well as several financial analysts.
Working onsite with the Trinity executive leadership team three-to-four days a week, Pam
and the Warbird team collaborated with the hospital’s finance department to devise a
detailed plan of action to put the organization on financial track. With her expertise, Pam
spearheaded the development of a long-range financial plan that included a return-oninvestment analysis for the EPIC and heart hospital projects, and helped define the need for
bond financing for expected capital outlays in the next three years.
After the long-range plan was approved by the Trinity finance committee and executive
leadership team, Pam prepared the organization for review by Fitch and Moody’s. Trinity’s
current ratings were confirmed and Pam led the combined finance team in working with
investment bankers to execute a successful bond issue.
In addition to addressing the immediate financial challenges facing Trinity, Pam worked
with CEO Lindsey Bradley to restructure the finance department and its functions for longterm improvement, including instituting a department of internal audit, and defining its
responsibilities, staffing models and detailed audit programs. She also reviewed Trinity’s
investment practices and policies and recommended key changes in cash management and
investment allocations to Trinity’s finance committee. All of these changes were
implemented and have resulted in a more robust finance function with greater returns and
lower risk.
Finally, Pam worked with Lindsey and Trinity COO Ray Thompson to rewrite the CFO job
description and provided expert input during the selection process for a permanent CFO.
Trinity selected Joyce Hester, an internal candidate, and Pam has continued to consult with
Trinity as a mentor for the new CFO with regular update calls to provide counsel in the
areas of bond financing, investments and more.
Results
Warbird’s expertise in healthcare finance management and its ability to build a customized
On-Demand team to meet the hospital’s specific needs provided the following results for
Trinity Mother Frances Health System:
• New Chief Financial Officer
• New bond financing at attractive rates
• Established department of internal audit
• Robust investment policies, including new asset allocations for corporate and retirement
funds, and an improved cash management system
• Completed reviews of ratings, which were confirmed
• Restructured bond portfolio with reduced interest expense and lower risk
• Process to review and standardize physician incentive compensation programs
• New record keeping and investment management firm for the system’s 403(b) pension
plan, which resulted in significant annual savings to participants
• Long-range financial plan and model, which could be updated by Trinity staff in the future
• Standardized financial analysis and capital analysis

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