Old Dominion Health Plans, Essay Example

Old Dominion Health Plans is a managed care which is a non-profit organization in Virginia. It was the first to receive national accreditation from the National Committee for Quality Assurance, high ranking for performance and standards. This market has 4 primary competitors with an edge in geographic coverage and financial resources, hence key players in the Virginia managed care industry. Cash flow from operations reveals a net decrease in cash and cash equivalents while financial statements show increasing equity and decreasing debt for fiscal year 2005 which is important for potential investors and acquisitions. There has been a substantial growth in 2004 & 2005, indicating a higher return on assets and equity for the organization relative to the industry average which is substantially lower. Old Dominion has the highest number of inpatient days for enrollees plus inpatient expenses. Financial and clinical managers should team up so as to capitalize on their strengths and fix their weakest areas.

The operational and financial analysis of Old Dominion Health Plan indicates a substantial increase in revenues and net income from 2004 to 2005, increase in current assets, long-term assets, revenues as well as expenses. Its executive team should focus on particular plans while applying strategies aimed at reducing expenses.

This financial analysis of Old Dominion Health Plans compared to its competitors indicates that its financially sound as marked by Margin increase (ROE and operating margins), hence, Old Dominion is better placed to deal with opportunities and/or handle down turns. Old Dominion has managed its debt well as indicated by its lower debt ratio compared to others in the same industry, hence can easily borrow funds at a good rate. However, Old Dominion has higher expenses than the rest of the industry thus a competitive drawback and a need to decrease the same so as to improve its financial position.

Third party payers in order to give cost effective and comprehensive movement, they implemented nonprofit health Maintenance organization whose responsibility are quality care and cost control. The board ensures interests of patients but do not influence decision making or give advice on financials. Old dominion health plans has a lot of members enrolled in a public provider network thus increased accounts payable. Profits arise from managed costs. In terms of business and financial risks, HMO assists in cost control and quality management while payers employ rules thus building trust. Old Dominion Health Plans’ competitors have advantage by providing similar services.  Profits stabilization is by expanding its market.

References

Gapenski, L. (2005). Cases in Health Care Financing. 3^rd Ed. Chicago: Health Administration Press.

Gapenski, L. (2007). Understanding Healthcare Financial Management. Chicago: Health AdministrationPress.

Gapenski, L. (2006). Cases in Healthcare Finance. Chicago: Health Administration Press.