The board of directors of your for-profit hospital has been approached by a nonprofit hospital to consider a joint venture to take over their business resulting in a larger for-profit medical center status. You have been asked to construct a financial risk analysis for this conversion. Using course materials, including your text and the Internet, and principles of financial risk analysis, evaluate the considerations that a nonprofit hospital has in considering the conversion to a for-profit hospital.
Consider the following options in support of your decision:
- Projected profit and loss statements
- Retention of estimates
- Selected cost of capital
- Other spreadsheets and calculations you feel are needed to support your decision
Consider the following topics in your discussion:
- Key characteristics of nonprofit hospitals that differ from for-profit hospitals
- Include the characteristics required to maintain a nonprofit status.
- The need for shifts in corporate structure required for survival in this environment, including safety net requirements and responsibilities
- Potential reasons driving both organizations and considerations between an outright merger versus a corporate alliance or joint venture.
- Assessment of the payer mix, financial benchmarks of nonprofit and for-profit hospitals
- Consider uncompensated care burdens within the for-profit model
- Proffer a decision based on your analysis of whether the organization should convert, create a joint venture, or decline the offer with rationale and justification.
Your paper must include your financial information derived in your risk analysis as an appendix included after the Reference page.
The body of the resultant paper should be 57 pages. Applicable spreadsheets should be attached to support your decisions. The assignment should include at least 5 relevant peer-reviewed academic or professional references published within the past 5 years.