St. Xavier Healing Touch Hospital Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

St. Xavier Healing Touch Hospital Case Study Solution

Recommendations:

It is recommended to the Hailing Touch Hospital to focus more on developing the better forecasting to generate favourable results in the form of profitability and lower costs to maximize its funds. The measure of the costing would be based on activity-based cost allocation to even improve its efficiency and performance. The customers would be demanded lower fees and higher service. The objective of the company should be based on minimizing its costs and increasing profitability which would help the company in retaining its patients through quality service and target should be set to achieve 10% growth in profits. The measure used by the current director for growth is based on only employee turnover which needs to be altered and go for another better measure as the profitability from projects and maximizing its capital budgets through low investment risk and financial risk.The second measure of the customer can be improved by involving the repeat services used by the patients so that it can be measured with more accuracy. Furthermore, the company is unable to achieve the budgets which need better forecasting techniques to convert the unfavourable results to favourable results for the company by setting SMART goals.

Financial Analysis:

The healing touch hospital’s budgets were analyzed for the last two years i.e. 2001 and 2002 by looking at the revenues and expenses budget which are mentioned in the excel files under the file name of Q1a. The revenues and expenses variances were calculated by keeping in mind the budgeted and actual data and the results for the year 2001 shows that the revenues of the company were lower than its budgeted revenues, which resulted in negative variance and thus the total revenue variance is unfavorable for the company and same goes for the expenditure and operating profit for the company.

This also results in the negative variance for the company, which leads to unfavourable results for the company as well. However, the 2002 data for projected and actual revenues, expenses and operating profit also show negative variances for the company, which means the estimation of the company is unfavourable and it is overstated and the company is unable to achieve its budgeted targets.

St. Xavier Healing Touch Hospital Harvard Case Solution & Analysis

The variance for the number of doctors and their salaries were evaluated through quantity and price variance. The results of the number of doctors show the negative variance and it results in the unfavourable estimation of the company whereas, the salary of the doctors have been calculated on favourable terms because the salary of the doctors was estimated higher but it resulted in the lower average salary of the doctors.

The supplies were evaluated through quantity and price variance and it shows that the number of supplies to be used estimated at greater rate but the actual supplies used were less which showed favorable results for the company whereas, the price of the supplies was not estimated well because it showed unfavorable results due to the lower estimation and actual price of supplies was high.

The Healing touch hospital is losing money because the estimation of the company is not up to the mark and it is estimating quite poorly due to which its variances are showing unfavourable results and in the end, the company is losing money. The same unfavourable results were found in insurance price estimates.

The two procedures which were not covering its costs by generating revenues less than its costs consist of MRI and CT scan and this shows the loss of ($24,102.56) due to MRI and ($15,076.92) due to CT scan which makes a total loss in revenues and profitability amounting to around 39,179.49 dollars.

After analyzing all the three projects, ranking can be assigned on the basis of highest NPV as rank 1 which is for Project Gamma $1,261,117.06 whereas, second ranking is assigned to Project Beta as it is generating NPV of $429,929.71 but, Project Alpha will not be chosen because it shows negative NPV and it would be ranked 3. Moreover, the company needs to borrow $564,694.06 for Project Alpha, $205,767.06 for Project Beta and $705,867.57 for Project Gamma. On the basis of 50% probability of the riskiness of Project Gamma would also result in the negative NPV and the project would not be accepted. The project would not be recommended because the highest NPV is shown by Project Gamma.

The potential liabilities are quantified and would not be added in the balance sheet because these liabilities become part of the disclosure and the liabilities such as defined pension fund is over funded and the results are shown in the excel file attached. Yes, these liabilities will have an impact because it would result in lower capital requirements for the company and the company will have to borrow less amount under each project. Yes, I would recommend the director to go for long-term debt financing because it would lead to utilize the amount of expansion of projects and results in favourable conditions for the company and generate profits.

The results of the above analysis show that the company should budget its income statement and all the given variables for 2003 and the results show that there will be a decrease in patients by 3.1%, fees per patient would be increased by 15%, and Medication per patient would increase by 10% and so on. Overall, the budget of 2003 shows favourable results for the company and it would be beneficial in making its strategies for budget forecast stronger and 10% return requirement. All the details are separately added in detail in excel file which can be referred for further clarification of the above-mentioned analysis and decisions.................

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.