What are the key financial policy targets for which the board is responsible for? List and explain each. How does the financial planning and strategic planning of the new for-profit status align with...

Strategic Planning and Financial Planning in the Hospital setting
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This task was originally submitted during 1501A-01 HCM640 with Dr. Li.
Strategic and Financial Planning in the Hospital Setting
Christian Worrell
HCM640-1501B-01
Dr. Kristy Taylor
CTU Online
March 22, 2015
Strategic Planning and Financial Planning in the Hospital setting
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Abstract
ABC Community Hospital has had their management taken over by XYZ Healthcare System
which is a for-profit healthcare chain. XYZ Healthcare wants to build a new wing for the Cancer
Center, but the Board of Directors are worried about taking on additional debt of the Cancer
Center. There are several key financial policy targets, financial planning and strategic planning
are important on how to understand how the Cancer center is going to work within the hospital.
Strategic Planning and Financial Planning in the Hospital setting
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There are multiple issues that we have to deal with since there has been a proposal to
build a new Cancer Center. This will be an important addition to the hospital, but at the same
time is a huge financial undertaking. The board of directors is worried about the additional debt
of the Cancer Center, but since there is not another cancer center within 200 miles this could be a
wonderful addition for the community as well as for the profit of the hospital. There are key
financial targets that the board has to be responsible for, the financial and strategic planning is
important, as well as how management control is going to be used within the hospital.
The financial plan of the healthcare firms are built on the projections of the service levels
or activities that the firm will undertake in the years to come. The strategic plan build gives an
indication of the products and services to be offered by the firm in the coming 5 years of its
operation (Cleaverley, Cleaverley, & Song, 2012).
Subsequent are the main financial targets that the board is accountable for making.
 The rate of growth in assets- the board of directors is accountable for classifying the
amount at which the assets of the hospital will grow. They need to venture the income
from service which they will be able to produce over a period of time. Once they have a
rudimentary knowledge about the influxes of cash, they can effortlessly plan to capitalize
their money in obtaining assets for the hospital. As the medical equipment as well as
surgical equipment comprises vast cash flow and enhances to growth in assets, the board
should cautiously set their objectives for growth rate of assets.
 Policy regarding the level of debt- as the medical equipment as well as surgical
equipment demands huge cash flow and it is not conceivable for the healthcare firms to
internally finance all the cash flow mandatory the board has the accountability of setting
the debt policy of the hospitals. Whereas the hospitals have low limits it is better not to
Strategic Planning and Financial Planning in the Hospital setting
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load the balance sheet with debt, as the hospital will end up being a loss making hospital
as they will not be able to pay the...