HADM 6370 Integrated Business Case Analysis and Grading Rubric
“A business case document is a formal, written argument intended to convince a decision maker to approve some kind of action. A well-crafted business case explores all feasible approaches (note: you will present only one option) to a given problem and enables business owners to select the option that best serves the organization. A business case for a health care improvement intervention exists if the entity that invests in the intervention realizes a financial return on its investment in a reasonable time frame, using a reasonable rate of discounting. This may be realized as “bankable dollars” (profit), a reduction in losses for a given program or population, or avoided costs. In addition, a business case may exist if the investing entity believes that a positive indirect effect on organizational function and sustainability will accrue within a reasonable time frame.” (Source: http://content.healthaffairs.org/content/22/2/17.full)
Primary Task: Utilizing the information provided in Case 1 and Case 5 of The Middleboro Case Book, complete a comprehensive analysis of Middleboro Community Hospital’s (MCH) current situation and provide a business case analysis (BCA) that supports the accomplishment of MCH’s strategic initiatives and its long-term viability.
The Situation: MCH’s Board of Trustees and senior management recently met to update their strategic plan and in doing so identified the following long-term objectives for which you, the newly hired VP of Marketing, are to develop a supporting BCA to: (1) Increase annual profits by 25% over 2014 profits within 6 years. (2) Increase net patient services revenue by 20% over 2014 patient services revenue levels within 6 years. These objectives are to be achieved through the following strategies: (a) Increasing organizational cost efficiency and (b) increasing MCH’s market share through market penetration, diversification, and market or product development.
As you know, interest is growing in the city of Jasper for a hospital. We estimate that if CON approval could be secured it would take a minimum of four years for a new hospital to be fully operational. Even without a new hospital in Jasper, however, the new highway between Capital City and Jasper will significantly change hospital utilization. Independent consultants have estimated that once the new highway is operational the hospitals located in Middleboro will lose approximately 15 percent per year of their utilization from Jasper. Current estimates indicate that this new road will be fully operational by December 2018. This lost utilization per year will be absorbed by the hospitals located in Capital City. What should we (MCH) do, and why? Prepare a business case analysis that supports our organizations strategic objectives described above. Your BCA will be the basis for your presentation to the MCH Board of Trustees for their consideration and approval. Your BCA will cover the next six years, which includes the three years after the new road is expected to become operational.
Business Case Analysis Format: Provide a 3-5 page narrative (1.15 to 1.5 spacing is acceptable; 12 pitch font, 1” margins) supporting your key recommendations to counter MCH’s pending loss of the Jasper market share. You may include tables, figures, calculations, etc. in an appendix that is not part of this page count. There are numerous opportunities presented in Case 5 that have merit. Based upon your analysis, select one opportunity upon which to focus and present your case for it. State any assumptions you make that are not provided in the cases (you can include those as an appendix if needed). Include with your submission, an Excel spreadsheet to show the financial analyses you conducted.
BCA Content (minimum, but not limited to):
Financial Analysis: Assess MCH’s financial position applying analytical tools you learned in Finance I and II. Can MCH absorb this potential patient volume loss from their Jasper market without any detrimental impact? When making your recommendations, consider what they should do to strengthen their financial position if needed. Also, the recommendation(s) you make needs to be financially feasible, so describe the types of analyses you perform to determine the investment’s value to MCH. Conduct appropriate analyses where financial data is available. Indicate how you would finance any required capital expenditures (i.e., debt, equity, or both) and why.
SWOT Analysis: Discuss MCH’s key strengths, weaknesses, opportunities, and threats. In doing so, you need to not only pull aspects from the cases’ narrative, but also incorporate findings from select data provided in the two cases’ tables. You do not need to assess all of the data, only that data that you believe is most relevant to your task at hand. You do need to include a discussion of MCH’s market position relative to their primary competitor (Webster Hospital) and MCH’s current and potential target patient populations’ demographics. Do consider the quality measures provided in Table 5.8 and the population’s health status as presented in Case 1. You may also find Webster Hospital’s data helpful in your analyses relative to the competitor (see Case 4 Tables).
Recommendation with Supporting Arguments: Identify the possible alternatives that MHA could pursue and then based upon your previous analysis, select only one alternative to pursue. Indicate your recommendation(s) and provide supporting justifications based upon your analyses. Discuss the benefits and associated risks of implementing this proposal. Fully describe the changes MCH (organizational plans) would have to make to implement this proposal and provide an estimated timeline for implementation.
Grading Rubric aligned with MHA Program Competencies:
Process Management and Organizational Design: The ability to analyze and design or improve an organizational process, including incorporating the principles of quality management as well as customer satisfaction.
Learning Outcomes: Demonstrates ability to analyze organizational data, including existing quality and patient satisfaction indicators, and to utilize findings to drive organizational changes.
Grading Rubric:
Proposes a modification to MCH’s current health care delivery system that would provide quality care to their targeted population.
Incorporates MCH’s organizational data, including existing quality and patient satisfaction indicators, into the SWOT analysis and bases recommended organizational changes on their findings.
Communication Skills. Prepares Effective Written Business Cases or Presentations
Learning Outcomes: Demonstrates, in written response, logical presentation of thoughts and proper use of grammar and sentence structure.
Grading Rubric:
Demonstrates, in written response, logical presentation of thoughts and proper use of grammar and sentence structure.
Performance Measurement: The ability to understand and use statistical, economic, epidemiological, and financial methods and metrics to set goals and measure clinical as well as organizational performance; commitment to and employment of evidence-based techniques.
Learning Outcomes: Makes evidence-based recommendations through the assessment of existing statistical, epidemiological, and economic performance measurements as provided in the case study.
Grading Rubric:
Bases recommendations on a thorough assessment of existing statistical, epidemiological, and economic performance measurements as provided in the case study.
Critical Thinking and Analysis. Ability to break a situation, issue or problem into smaller pieces or tracing its implications in a step-by-step way.
Learning Outcome: Demonstrates application of analytical skills and critical thinking in the evaluation of the situation/problem and identification of the solutions by: identifying multiple elements of the problem, breaking those elements down in detail, and showing causal relationships between them; peels back the multiple layers of the problem; uses several analytical techniques to identify potential solutions and weigh the value of each.
Grading Rubric:
Identifies multiple elements of the situation facing MCH.
Demonstrates accurate and complete presentation of facts, supports arguments, and evaluates the pros and cons of the various scenarios / situations.
Discusses the various components of the recommendation, presenting supporting justification, its risks and its benefits.
Strategic Orientation. Ability to consider the business, demographic, ethno-cultural, political, and regulatory implications of decisions and develop strategies that continually improve the long-term success and viability of the organization.
Learning Outcomes: Demonstrates ability to develop organizational goals/plans that take advantage of its strengths, addresses its shortcomings, builds on opportunities, and attempts to minimize environmental threats. Analyzes the forces that are shaping health over the next 5 to 10 years (market, social, cultural, economic, and political) as it relates to their organization and the community it serves; and bases organizational changes/plans on his/her findings.
Grading Rubric:
Develops organizational plans that take advantage of MCH’s strengths, addresses its shortcomings, builds on opportunities, and attempts to minimize environmental threats.
Develops organizational plans based upon an analysis of the forces that are shaping MCH’s health care environment over the next 5 years (e.g., market, social, cultural, economic, and political) as it applies to the case scenario.
Financial Skills. Ability to understand and explain financial and accounting information, prepare and manage budgets, and make sound long-term investment decisions.
Grading Rubric:
Accurately applies at least two different types of financial analytical tools in the analysis, drawing appropriate conclusions relevant to the case.
Discusses at least one other type of financial analysis that should be conducted in this BCA, explaining the type of data that would be needed to do so.
Based upon the financial analysis, determines the most appropriate capital financing strategy to pursue related to the recommended long-term investment decision.
Here are some key financial ratios for MCH. You may still want to consider others. Interpretation of these ratios does not count as one of your required two financial analytical tools listed in rubric #11.
2014
2013
2012
Current Ratio
2.01
2.03
1.85
Days Cash on Hand
53.44
44.35
29.17
Days in Accounts Receivables
63.31
59.06
55.82
Average Age of Plant
12.27
11.16
10.11
Total Margin
2.31%
2.54%
4.26%
Return on Assets
2.04%
2.30%
3.99%
Return on Equity
3.16%
3.56%
6.17%
Debt Ratio
35.48%
37.38%
39. %
Total Asset Turnover
0.88
0.91
0.04
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