This is a financial accounting/Banking Task. Please write a 5 pages paper using the guidelines, case study and spreadsheet provided – 5 pages. Don’t plagiarize as it would be checked. Just perform the task by following the guidelines.
1. Ensure you check the zip for detailed instructions.
2. Please read the case study carefully. A complete write-up will address all issues raised in the prompt. In particular, your write-up should include the following components: Financial Statement and Operating Indicator Analyses .
a. Statement of cash flows analysis.
b. Du Pont analysis, in which you compare 1) Commonwealth’s ROE in 2016 vs. Commonwealth’s ROE in 2017 and 2) Commonwealth’s ROE in 2017 vs. the national HMO industry median in 2017. To calculate the 2017 industry median ROE, use the median total margin and median total asset turnover, and derive the equity multiplier from the median debt ratio (see Exhibit 23.4). Your calculated ROA and ROE will differ from the medians reported in Exhibit 23.4, which is okay.
c. Analyses of select financial ratios and operating indicators. These analyses should 1) consider trends over time and 2) compare Commonwealth’s performance to that of its primary competitors in Virginia, state-level industry data, and national-level industry data (whenever the relevant data are available).
d. Analysis of Commonwealth’s medical loss ratio (MLR). Please consider the ACA required MLR minimum threshold of 85% for large group plans.Conducting Analyses for Different Industries.e. Discussion of key differences in analyzing financial and operating performance for a managed care organization (MCO) vs. for a hospital or other provider organization. Key Areas of Concern and Recommended Courses of Action.f. Based on the results of your analyses, you should identify and discuss key areas of concern for Commonwealth’s management.
g. Lastly, you should develop a set of clear, actionable recommendations for how Commonwealth could potentially improve its financial and operating performance.
3. There are many different financial ratios and operating indicators that you could potentially consider, but you do not need to discuss all of them. Focus on specific metrics and performance areas that you think are most important and relevant to insurer operations.When analyzing financial ratios and operating indicators, do not just calculate numbers. Instead, you should consider trends over time, perform benchmarking, and discuss the significance and potential drivers of the metrics’ values. Healthcare Finance
P8533 PTM (Summer 2024)
Case Study #1 – Commonwealth Health Plans
Guidelines and Grading Rubric
1. The write-up should contain a maximum of 5 pages of text (typed, double-spaced, 12-point
font, 1-inch margins). You should include supporting figures in an appendix (maximum of 5
pages). Thus, in total, your team’s submission should be a maximum of 10 pages. Please
adhere to these guidelines, as deviations could result in a 5-point grade deduction. Designate
one member to upload your team’s write-up to CourseWorks. Each team is responsible for
conducting its own analysis and producing its own write-up.
2. Please read the case study carefully. A complete write-up will address all issues raised in the
prompt. In particular, your write-up should include the following components:
Financial Statement and Operating Indicator Analyses
a. Statement of cash flows analysis.
b. Du Pont analysis, in which you compare 1) Commonwealth’s ROE in 2016 vs.
Commonwealth’s ROE in 2017 and 2) Commonwealth’s ROE in 2017 vs. the national
HMO industry median in 2017. To calculate the 2017 industry median ROE, use the
median total margin and median total asset turnover, and derive the equity multiplier
from the median debt ratio (see Exhibit 23.4). Your calculated ROA and ROE will differ
from the medians reported in Exhibit 23.4, which is okay.
c. Analyses of select financial ratios and operating indicators. These analyses should 1)
consider trends over time and 2) compare Commonwealth’s performance to that of its
primary competitors in Virginia, state-level industry data, and national-level industry data
(whenever the relevant data are available).
d. Analysis of Commonwealth’s medical loss ratio (MLR). Please consider the ACArequired MLR minimum threshold of 85% for large group plans.
Conducting Analyses for Different Industries
e. Discussion of key differences in analyzing financial and operating performance for a
managed care organization (MCO) vs. for a hospital or other provider organization.
Key Areas of Concern and Recommended Courses of Action
f. Based on the results of your analyses, you should identify and discuss key areas of
concern for Commonwealth’s management.
g. Lastly, you should develop a set of clear, actionable recommendations for how
Commonwealth could potentially improve its financial and operating performance.
3. There are many different financial ratios and operating indicators that you could potentially
consider, but you do not need to discuss all of them. Focus on specific metrics and
performance areas that you think are most important and relevant to insurer operations.
When analyzing financial ratios and operating indicators, do not just calculate numbers.
Instead, you should consider trends over time, perform benchmarking, and discuss the
significance and potential drivers of the metrics’ values.
4. You should present and organize your results using tables and graphs. To save space, place
all figures in the appendix.
Clarifications
On Pg. 150, you are given information about Commonwealth’s primary competitors in Virginia.
You can assume that 2017 total enrollment is reported in member-months.
In Exhibit 23.2, “patient days per 1,000 enrollees” refers to “inpatient days per 1,000 enrollees.”
Also, you are given the number of commercial member-months and Medicare member-months
for Commonwealth. You can assume that, on average, members are continuously enrolled for 12
months. Therefore, you can use the following approximation:
# 𝑜𝑓 𝑚𝑒𝑚𝑏𝑒𝑟𝑠 𝑖𝑛 𝑎 𝑔𝑖𝑣𝑒𝑛 𝑦𝑒𝑎𝑟 =
# 𝑜𝑓 𝑚𝑒𝑚𝑏𝑒𝑟 𝑚𝑜𝑛𝑡ℎ𝑠
12 𝑚𝑜𝑛𝑡ℎ𝑠
Grading Rubric
Category
Expectations
Possible Points
Financial Statement
and Operating
Indicator Analyses
Statement of cash flows analysis [10 pts]. Du Pont
analysis [10 pts]. Analyses of select financial ratios
and operating indicators [20 pts]. MLR analysis [10
pts]. Grading will be based on correctness and depth
of the analyses.
50
Conducting
Analyses for
Different Industries
Provides clear, specific examples of key differences
in analyzing performance for a managed care
organization vs. for a provider organization.
10
Key Areas of
Concern and
Recommended
Courses of Action
Carefully identifies and discusses key areas of
concern [15 pts]. Thoughtfully develops a set of
clear, specific, actionable recommendations [15 pts].
30
Overall Quality
Write-up is well-written; organized; free of
grammatical, spelling, or typographical errors;
conveys a professional tone; and follows all
formatting guidelines. Included figures clearly
present the analytical results. Demonstrates a solid
effort to think critically about the presented issues.
10
TOTAL POINTS
100
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