In today’s society there are constant changes. Especially in healthcare, there are always emerging illnesses that arise along with governmental changes. When identifying drivers that affect healthcare, there are many factors that come to mind. However, the drivers that I felt played a major role were costs along with the changes of the values of the business. A cost is the most effective driver that will most likely cause healthcare organizations to merge. As with any organization, finances will always be an important factor. Most industries today as a whole are faced with a variety of obstacles in achieving business goals or remaining profitable. Along with costs comes profitability. Profitability is defined as being the primary goal of all businesses. If profitability is not present, a business will not survive. Likewise in healthcare, if profitability is not present, hospitals, medical centers and various providers will not be able to remain in business. Profitability is enough of a challenge under normal circumstances, but especially so during fragile economic times. Uncertain revenue streams and rising costs have many healthcare organizations understandably apprehensive.
In older years, hospitals were typically the only place for treatment. However, in current times, medical clinics are constantly emerging almost daily. There has been the founding of clinics, urgent cares and emergency centers that have come into place taking on the roles of some of the hospital systems. But, most like any business, these centers must have in depth plans to be able to accommodate patients, supply materials and compensate the workers.

Traditionally, hospitals were more focused on managing revenues rather than on costs to insure profitability. But this focus on revenues has become increasingly more difficult to plan, execute and manage due to confusing healthcare reform, complex insurance reimbursements, community perception, government red tape and political concerns. Conversely, cost management has been a topic of discussion for the past decade but has not been a priority due to limited administrative resources.

Assuming that two (2) health care organizations have merged. Determine the evaluation criteria that a financial analyst would use to evaluate the financial performance of the organization post-merger, and identify the determinants that the analyst would use to decide whether or not the merger generated favorable financial results for the organization. Provide support for your evaluation.

Financial ratio exposes the position of the business in terms of performance and efficiency of operation. They show whether the management are efficient or inefficient in their utilization of resources such as capital assets, labor etc. The degree of leverage of a company is ascertained from financial ratio analysis and this will enable stockholders and other suppliers of capital known the degree of gearing in a healthcare’s capital structures.