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Health Care Organizations: Finance

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Please help with some information regarding this assignment, and this is not an essay:

"identifies forces that can impact a healthcare organizations financial position. Critically discuss on how payer mix, uninsured patients, and the economy can impact a healthcare entity's financial position."

400 words

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There are several forces that can impact health care organizations' financial positions. The implementation of the Obama Health Care policy will have a strong impact on the financial positions of health care. There are limits about the profits that may be earned by the organizations. As more people avail themselves of affordable insurance, it means there will be lower margins for health care facilities. There are stringent reimbursement policies for low cost insurance. With expansion of Medicaid and CHIP there will be lower margins. The health care organizations will barely be able to cover their operating costs. The health care institutions will have difficulty in making capital investments. The new policy prescribes that more cannot be charged from patients who are regularly or chronically sick. The ...

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The answer to this problem explains health care organization financial pressures. The references related to the answer are also included.

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Health Care Organizations and Bankruptcy

The following discussion leads to 3 questions below, each requiring no more than a 50-100 word response. Use the attached material to help answer the questions.

Many believe that modern capital structure theory began when Professors Modigliani and Miller (better known as the first M&M) published their 1958 paper, "The Cost of Capital, Corporation Finance and the Theory of Investment." In their paper, M&M showed, under a very restrictive set of assumptions, that a firm's value is unaffected by its capital structure. In other words, M&M suggested that it does not matter how a firm finances its operations, hence capital structure is irrelevant.

Their initial paper had a number of critics, especially since the study was based on some rather unrealistic assumptions. Nevertheless, M&M's irrelevance result is very important to the theory of corporate finance. By indicating the conditions under which capital structure is irrelevant, M&M also provides readers with clues about what is required for capital structure to be relevant and hence to affect a firm's value.

M&M published several more studies which expanded the concepts in their 1958 article, and directly addressed critics' comments. The resulting "M&M Theorems" on capital structure and dividend policy are an essential element of the foundations of the theory of corporate finance. M&M's efforts in this area were among the achievements which resulted in a Nobel Prize for both authors in 1990.

McLean does a pretty good job of reviewing M&M's work (starting on page 254). It is noted that M&M's irrelevance results depend on the assumption that firms do not go bankrupt; hence there are no bankruptcy costs. However, in practice bankruptcy exists, and it can be quite costly, as shown in McLean. Note, too, that the threat of bankruptcy also brings about multiple problems for the firm.

Recent OIG reports (http://oig.hhs.gov/) show that financial distress is the top reason for hospital closures in the US. Since bankruptcy is an available option for dealing with financial distress I would like to get your views on this issue.


1. What does a bankruptcy actually do for a HCO? Include a discussion of the types of bankruptcy available to HCOs in your response. How does the threat of bankruptcy affect the HCO?

2. What options, other than bankruptcy, are available to the HCO suffering from severe financial distress?

3. Do you see any trends in HCO bankruptcy? Can you provide an example of a HCO which used bankruptcy to deal with financial problems?

Please be concise, no more than 50-100 words for each question. Thank you.

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