New England Healthcare (NEH) began its two teaching and research hospitals in 1994. Following the two hospitals merger, “several suburban acute-care hospitals had also elected to join the NEH system, as had a large number of primary-care medical practices in the region” (Light, 2005, p.296). New England Healthcare was considered to have high quality health care services and education (teaching) in the course of break-through medical research.
With variable operating margins, New England Healthcare struggled to receive reasonable reimbursements from managed-care organizations, government financed, and third-party payers. Along with these market factors came additional margin pressures “… due to increased labor costs, rising unemployment”, shortage of professionals, “and government cost-control efforts” (Light, 2005, p.298).
A meeting conducted by the Investment Committee of New England Health Care, in January 2003, focused on the target asset allocations of its three long-term investment funds. Which include the Long-Term Pool of endowment-like funds, the assets of a final-salary pension plan, and the assets of a cash balance pension plan.
The Investment Committee is responsible for tasks related to funds performance evaluations, formulating each funds target, benchmarks (corporate discount rates), and “… tactical asset allocation portfolios; and selecting and monitoring the various external investment firms that manage a large fraction of each fund’s assets” (Light, 2005, p.296).
Within 2003, “… an Executive Committee of the Investment Committee met monthly to monitor tactical allocations and changing market valuations” (Light, 2005, p.298). According to Investopedia (2008), “This strategy allows portfolio managers to create extra value by taking advantage of certain situations in the marketplace. It is a moderately active strategy since managers return to