The most important factor in the long-term financial success of the healthcare firm is sustainable growth. For an organization to be financially successful, it should have the ability generate the resources required to accomplish its goals. These resources include all factors of production that must be present to deliver the health services (Cleverley and Cleverley, “Financial Position.”). The factors comprise of equipment, supplies, buildings, as well as the human resources. Additionally, the balance sheet is used to track down the healthcare resources by providing a list of the organization’s assets, including the financial acquisition patterns of those assets. The range and quantity of the healthcare services reflected in an organization’s mission statement reflects the number of resources required to accomplish the healthcare production services. In the event of lack of scientific standard for resource requirement, a healthcare facility can benchmark against other healthcare association to determine the resource needs. For an organization to finance its resources, it requires either debt or equity funds (Cleverley and Cleverley). Therefore, the financially successful healthcare organization must have the ability to generate capital via debt or equity, which is a necessity for financing the needed level of resources.
Primary Financial Objective of the Healthcare Firm
Given the long-term financial goal of healthcare organizations as sustainable growth, then its main financial objective is equity growth. Sustainable growth is characterized by equity growth that meets or exceeds the asset growth (Cleverley and Cleverley). In the event of low equity growth rates over a long period, the organization is set to fail to sustain the level of adequate resources required to meet their goals. Therefore, the asset growth potential corresponds to the growth rates in equity within a specific timespan. Therefore, an organization anticipating to sustain its viability must increase investments or assets to reflect growth in equity. The health organizations experiencing low equity rates rely majorly on their accounts receivable and supplies for their asset growth. These entities direct less input towards renovation, replacement of equipment, and entry into new markets, which threatens sustainability in the long run, especially if the firm is surrounded by organizations experiencing high equity growth rates.
Major Non-Hospital and Non-Physician Sectors of the Healthcare Industry
The major non-hospital sectors under the nursing homes include; Kindred Healthcare (KND), Ensign Corp. (ENSG), and the National Healthcare (NHC). The non-physician sectors under the health insurance firm include; United Health Group (UHP), Aetna (AET), and Anthem (ANTM).
Major Sources of Revenue and Expenses of Medical Groups
According to Cleverley and Cleverley, the expenditures for physicians’ and clinical services amounted to around $604 billion in 2014. The physician’s expenditures have been recording a higher increase constantly as compared to other sectors in the healthcare industry, thus increasing the relative importance of the physicians in the industry (Cleverley and Cleverley). The expenditure is reflected in the admission and discharge of patients, prescription of drugs, directing costly diagnostic images, as well as scheduling rehabilitative services. These services direct huge amount of healthcare resources towards or from a patient, resulting to high expenditure. Unlike other major healthcare sectors, the total revenue for the medical groups is majorly obtained from the private sector, compared to that received from public sectors like Medicaid and Medicare. For instance, in 2014, physicians received a total of 59% revenue from the private sector while the hospitals received 47% (Cleverley and Cleverley). There is a rapid increase in physician usage, leading to an increase in expenditure.
Cleverley, William & James Cleverley. Health Care Finance. 8th ed., Jones and Barlett Learning. 2018. Print.