Located in San Diego County, California, Paloma Health is a public health care district organized in pursuance of Division 23 of the Health and Safety Code State. It is one of the largest health care centers in California. Palomar Health carries out its operations in three hospitals in addition to home health care, ambulatory care, behavioral health services, wound care, and community health programs ( Kohlbry, Daugherty, Douglas, Gorzeman, Parker, & Adelman, 2016). Like every other organization, Palomar is keen on its finances which is reflected in its financial statements that indicate cash flows in the company. In the context of financial statements provided in the fiscal years 2012 through 2015, this paper will carry out an in-depth analysis of financial performance and financial condition of Palomar Health. In addition, is a provision of recommendations to the board of directors regarding ways in which Palomar Health can achieve its strategic objectives in addition to financial success.
Financial Condition and Performance
From the standpoint of financial condition, Paloma Health is fairly good. The revelation of the financial condition arises from the increase in the row of current assets. As of June 30 2015, current assets stood at $355,385. This was an increase from the two previous years where current assets stood at $314, 047 and $299,103 (Audited Financial Statements FYE, 2015). The increase in current assets helps offset the immediate debt incurred by the organization. Notably the current assets increased by $14,338 which is an equivalent of 13% in 2015. The current assets are inclusive of investments of $46,613 and net patients’ accounts receivable of $4,832.
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Regardless of a moderately good financial condition, Palomar’s Health financial performance is poor. This is indicated by a decreasing net income sequentially increasing the net loss of the organization. Based on the financial statements provided the net loss of Paloma Health was $488,096 in 2014 and by 2015, the net loss had increased to $656, 645. In addition to the factors causing a poor financial condition for the organization is the declining total assets. As of June 30 2013, 2014, and 2015 total assets for Palomar Health stood at $1,642,093, $1,592,848 and $1,581, 164 respectively. The decline in total assets is an indication of reduced net worth and financial strength of the organization. A major factor behind the decline in total assets of Palomar Health Care was the reduction in capital assets of the organization. In 2014, Palomar’s Health was $1,208,784 and by 2015 the worth of had declined to $ 1,154,277 (Audited Financial Statements FYE, 2014).
It is also worth noting that Palomar’s Health Care has increased its operating revenue to $36, 996 by the end of 2016. This was due to the increase in the revenue of net patient service revenue of $36, 020, and an increase in other revenue's element of $3428. On the other hand the costs of production or rather the operating expenses were on the rise. As of June 2015, the operating expenses had increased by $25, 059 which is an equivalent of 4%. Another indicator of poor financial performance is the reduction in the net position of statement revenues expenses and adjustments in net position by $ 45,371.
Recommendations to the Board of Directors
Based on the financial statements provided, Palomar Health is capable of achieving its strategic objectives both with financial objectives and success. Among the key strategic objectives of Palomar Health include the creation of pharmaceutical expenses management, collaboration with the Mayo Clinic Care Network (MCCN), outsourcing of information systems, and business development (Shadfan, Williams, Tkach & Loonia, 2017). Palomar’s Health collaboration with MCNN arises from the mutual goal of the two organizations; fostering physician collaboration to improve the delivery of health care to our patients and communities ( Palomar Teaming with Mayo Clinic, 2016). Sharing a common philosophy and commitment towards achieving quality health care to patients and families has brought the two organizations together.
One of the recommendations to the Board of directors Paloma Health is to increase cash flow in investing activities. Cash flow from investing activities is a section in an organization’s cash flow statement that reveals money generated from investing in a particular period (Ahiadorme, Gyeke-Dako & Abor, 2018). Palomar can make increase its investments, particularly in stocks and bonds. Based on the G.O bonds, Palomar Health has been issuing its bonds since 2009. As of June 30, 2014, and 2015 respectively the market bonds stood at $474,824 and $471,441 respectively ( Audited Financial Statements FYE, 2015). The increase in money allocated to investment activities enables an organization to fund new projects. Furthermore, the success in financial investing activities will enable the organization to achieve its strategic objective of business development (Rhode & Breur, 2016).
In addition to recommendations, the board of directors should also aim to expand their asset base while at the same time stabilizing capital assets of the organization that have been on the decline in the last 12 months. A strong asset base is critical to Palomar Health due to its ability to support the strategic objectives of the organization (Hansen, Kumura & Advisory, 2018). A final recommendation is to cut on the operating expenses of the organization that will be critical in achieving financial success. Some of the recommended ways in which Palomar Health can cut costs of operations include the use of budget reporting, engaging employees, and elimination of unnecessary expenses (McKee, 2016).
Conclusion
Financial condition and performance of a health care organization like Paloma are dependent on factors like current assets, strategic plans, and objectives, among other factors. Based on the findings from financial statements of Palomar Health, the financial condition is poor. However, the organization is still capable of achieving its strategic objectives through initiatives such as increasing and stabilizing the capital asset as well as channeling funds in investment activities in the cash flow column. Sequentially the company will be able to achieve financial success.
References
Ahiadorme, J. W., Gyeke-Dako, A., & Abor, J. Y. (2018). Debt holdings and investment cash flow sensitivity of listed firms. International Journal of Emerging Markets, 13(5), 943-958.
Audited Financial Statements FYE June 30, 2014. Palomar Health. Org. Retrieved from http://www.palomarhealth.org/board-of-directors/audits
Audited Financial Statements FYE June 30, 2015. Palomar Health. Org. Retrieved from http://www.palomarhealth.org/board-of-directors/audits .
Hansen, D., Kumura, T., & Advisory, P. F. (2018). Board Community Relations Committee Members--** Voting Member.
Kohlbry, P., Daugherty, J., Douglas, I., Gorzeman, J. A., Parker, J. A., & Adelman, M. L. (2016). The Healthcare Coach Role and Its Impact on Healthcare at Palomar Health.
McKee, A. P. (2016). Physicians Lead the Way in Transforming Healthcare. Frontiers of health services management, 32(3), 33-38.
Palomar Teaming with Mayo Clinic. 2016. The San Diego Union-Tribune. Retrieved from https://www.sandiegouniontribune.com/news/health/sdut-palomar-mayo-clinic-collaborate-2013dec04-story.html
Rohde, M., & Breuer, C. (2016). Europe’s elite football: Financial growth, sporting success, transfer investment, and private majority investors. International Journal of Financial Studies , 4 (2), 12.
Shadfan, A., Williams, R., Tkach, D., & Loonia, J. (2017). Tri-City Medical Center Strategic Marketing Plan.
