Health Care Finance Navigate 2 Scenario To Move or Not to.docx

Health Care Finance
Navigate 2 Scenario: To Move or Not to Move
January 2, 2018
1
To Move or Not to Move
Introduction:
In this scenario the Student fills the role of a newly appointed
CEO, for the Continuing Care Retirement
Community that is under the Hospital System from previous
Navigate Scenarios. A board retreat is
coming up and the Student must help the board with a critical
decision: Relocate the facility to a more
suburban area, or stay in its current, metropolitan area location.
As the scenario begins, the Student meets with friend and
mentor, Cheryl Noki, the former CFO of the
Hospital System who promises to help the Student make sure
this strategic decision is made with
proper consideration given to the financial implications. The
Student meets with a board member for
coffee to get her input and to learn that most of the board
members feel that if the facility does not
move, it will not survive. Next, the Student hears from the
Chairman of the Board who discusses other
problems such as lower pricing necessitated by an increasingly
crowded and competitive market, as well
as a dramatic reduction in realized revenue due to a decrease in

Medicare/Medicaid reimbursements.
The Student reviews all of this new information with the Mentor
and feels strongly that a move is
necessary in order for the facility to become competitive again.
The mentor explains the key target
ratios that the Board is responsible for, most importantly the
growth rate in equity (GRIE) in order to
convince the Student that a more financially feasible alternative
should be considered. The Student is
then able to suggest to the Board that reasonable facility
improvements can be made to the current
location and that, if management could focus on the key
financial ratio targets and improving operations
related to it, they can not only survive while paying for these
facility improvements, but thrive in the
future, too.
Characters:
1. Cheryl Noki
2. Donald Bailey
3. Natalie Jones
4. Casper Diggs
Locations:

1. Retirement Home Sitting Room
2. Student’s Office
3. Conference Room
4. Student’s Home
5. Coffee Shop
6. Hospital Cafeteria
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Scene 1: Meeting Your Mentor
The Student meets Cheryl Noki in the sitting room of the
retirement facility. They discuss the upcoming
Board retreat, the decision that needs to be made regarding
relocation, and then go off together to tour
the rest of the facility.
Location Retirement Home Sitting Room
Scene setup Student faces Cheryl who stands in the sitting
room.

On-screen characters Cheryl Noki
Off-screen characters None
On-Screen Text: First thing in the morning, you meet the
Hospital System’s former CFO . . .
CHERYL: Hi, nice to see you again.
STUDENT: Hi, Cheryl. Thanks for agreeing to meet me this
morning.
CHERYL: Anything for an old friend! Besides, as stressful as it
was sometimes being CFO for the system, I
really miss it. <Looks around> This room actually looks nicer
than I remember. You said you have
concerns about the facility?
STUDENT: Well, it’s the Board, really. They think our facility
is out of date, and that instead of investing
in renovation, we should relocate entirely.
CHERYL: I don’t know. I guess I’ll have a better idea once we
look around, but why do they feel they
should relocate? Is it because of the upsurge in lower-cost
retirement facilities being built in the
suburbs?

STUDENT: Exactly, and as CEO, they want me to evaluate the
situation and make a recommendation at
the upcoming Board retreat in a few days.
CHERYL: Where is Todd? Shouldn’t he be helping you on this
since he’s the new CFO?
STUDENT: He broke both legs on vacation a week ago and,
between the pain and the pain meds, he’s
admitted that he’s really no good to anyone right now.
CHERYL: That’s too bad. He was always into those extreme
sports, wasn’t he?
STUDENT: I don’t know if you can call ping pong an extreme
sport! He fell off a grandstand while
watching a heated ping pong match in Beijing.
CHERYL: Well, lucky for you, I don’t get so worked up over
ping pong! So, before we start, what are your
biggest concerns with the Board’s suggestions?
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January 2, 2018
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NOTE: Must select Option 1 to proceed.
STUDENT CHOICE 1: My biggest concern is the capital outlay
required for a relocation and whether we
can sustain it.
STUDENT CHOICE 2: I’m mostly worried about the current
residents. Moving them could be tough both
financially and emotionally.
CHERYL RESPONSE 1: I understand. But, don’t worry. We can
take a look at how the financial reality
matches up to this strategic decision. What do you think is the
best way to go?
CHERYL REPONSE 2: Possibly, but I think there’s a bigger
concern.
STUDENT: That’s just it. I’m not sure what the best decision is
at this point.
CHERYL: Well, the numbers usually have the final say, so I’m
happy to help put them together. But, first

let’s take a look at the rooms and the rest of the place. We want
to get an idea as to why the Board
thinks they’re too outdated.
STUDENT: Definitely. It’s French toast day in the dining hall,
so we’ll start there, okay?
CHERYL: Great plan! Lead the way, si vous plait!
Scene 2: Input from a Board Member
In this scene, the Student is visited by Natalie Jones, one of the
Board members, who expresses concern
for the future of the retirement facility.
Location Student’s Office
Scene setup The Student faces Natalie who sits in the chair
across from her desk.
On-screen characters Natalie Jones
On-screen text: Later, you have a drop-in visitor . . .
NATALIE: Sorry for dropping in on you unannounced like this.
I was hoping you had a few minutes to

talk.
STUDENT: No problem, Natalie. I always make time for a
member of the Board!
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NATALIE: Thanks. I know you’re busy getting ready for the
upcoming retreat. We have a lot of to
prepare for ourselves, but I wanted to let you know about a
concern of mine, as soon as possible.
STUDENT: What is it, Natalie?
NATALIE: Well, as you know, many of the Board of trustees
want to have our facility moved to a more
suburban location. But, I don’t think they’re considering all of
the financial implications. It’s almost like
they’re panicking and acting out of desperation. They think it’s
a matter of survival, that if we don’t
move, we’re going to go under fast.
NOTE: Must select both options to proceed
STUDENT CHOICE 1: As you know, we offer some high-end

services at our facility. Have they considered
adjusting that side of our strategic plan? It could help cut costs
and boost revenue?
STUDENT CHOICE 2: Do they really think we’ll solve our
market share problem by moving outside the
city?
NATALIE RESPONSE 1: They discussed removing some of the
more costly services from our roster, but
that didn’t seem to be the answer. Our high-end services are a
great way to distinguish ourselves from
the more low-cost, low-quality providers. Removing these
doesn’t line up with our long-term strategy.
NATALIE RESPONSE 2: Yes. They think that if we move our
high quality services to a location that is
closer to the “need” population, then we will gain market share.
People aren’t bringing their parents
here or moving here themselves, because the city is less-
convenient for family members to visit.
STUDENT: I thought that the Board also believes our rooms
look too outdated, not appealing to today’s
market population?
NATALIE: Yes, that’s true, too. So, if we moved to the suburbs
and constructed a more aesthetic facility,

they believe it would solve two problems at once. Then, if we
continued to provide the top quality care
and services we’re known for, the Board feels that we’ll quickly
gain back our lost market share, and
even pass up the low-cost newcomers relatively quickly, too!
STUDENT: I see where you’re coming from, but what if we just
advertised better and brought in more
prospects?
NATALIE: That’s fine. Better advertising may bring in more
prospects, but once they get here, they don’t
feel like it’s a top notch facility, simply because it feels more
outdated. People make a decision to live
with us, both on a deeply emotional as well as a cost-based
level.
STUDENT: I understand what you mean. Thanks for taking the
time to fill me in, Natalie.
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NATALIE: Well I appreciate you for taking such an active role
in this. I firmly believe that the Board and
Management have to work hand-in hand with both the strategic
and financial planning for our future, or
we won’t get anywhere! <Looks at phone> Speaking of which. I
gotta be somewhere! Nice to meet you!
See you soon!
Scene 3: A Call from the Chairman
The Student gets a video call from Donald Bailey, Chairman of
the Board, who gives him more
information to consider, regarding the relocation issue.
Scene setup The Student gets a video call in their office from
Donald.
On-screen characters Donald Bailey
On-screen text: Later, you get a call from the Chairman of the
Board . . .
DONALD: Hi, how’s our intrepid CEO today? Is your head
swelling from all the numbers, yet?

STUDENT: No, not yet, Donald. I am learning that this issue is
more complicated than it first seemed.
DONALD: Yes, welcome to my world! I’ve only been chairman
for a year, but even the four years I spent
on the Board prior taught me one important thing: Never make a
rush decision, because things are
seldom as simple as they seem!
STUDENT: Yes, I agree. I get the feeling that some of the
Board members would like to simplify our
situation, though.
DONALD: Not me, that’s for sure. The fate of the entire
Hospital System could hang on what we do with
this retirement facility. No pressure, of course!
STUDENT: Right, of course not! So, what side of the fence are
you on? To move or not to move?
DONALD: Can’t help but feel like Hamlet when you put it that
way! Only problem is, he was destined to
lose, whatever decision he made! It really is a difficult decision
and I haven’t decided yet. That’s why
I’m looking forward to your input.
STUDENT CHOICE 1: What do you think are our biggest
challenges?

STUDENT CHOICE 2: Do you think that our facilities need to
be renovated if we stay where we are at? I
toured several of them today and they did seem a bit outdated.
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DONALD RESPONSE 1: Our biggest challenges, I think, are
revenue and market share. You know how
crowded the market has become, and so we’ve had to lower our
prices to try to stay competitive. On
top of that, Medicare has reduced the amount of its
reimbursements, cutting us even closer to the
bottom line.
DONALD RESPONSE 2: Yes, I think we need a major
renovation, because, when you look at our growth
rate in assets and our debt policy, we won’t be able to maintain
our growth rate in equity if we don’t
make a major change.
NOTE: Must select Option 2 to proceed

STUDENT CHOICE 1: Can you repeat that in English?
STUDENT CHOICE 2: Well, don’t worry. I will be considering
all of those points over the next couple days.
RESPONSE TO 1 (Onscreen Text): Not the best choice here.
Please try again.
DONALD RESPONSE TO 2: I’m sure you’ll do a great job.
And, I heard Cheryl has offered to help too,
since Todd took his fall. The two of you will make a great team
for this. But, feel free to call me with any
questions if you need to, all right?
STUDENT: Thanks, Donald. Will do.
DONALD: Talk to you soon!
Scene 4: Digging in with your Mentor
In this scene, the Student explores the key issues of the
situation with Cheryl at lunch.
Location Cafeteria
Scene setup Student faces a Cheryl who sits at the lunch table.
On-screen text: That day, you have lunch with Cheryl . . .

CHERYL: Okay, now that we got that delicious meal out of the
way, let’s dig in to the good stuff: the
facts and figures of our problem here!
STUDENT: I’d rather have a piece of triple layer chocolate cake
for dessert, actually.
CHERYL: <laughing> Help yourself. I tend to forget that other
people don’t like this stuff as much as I do!
STUDENT: That’s okay. My appetite is actually pretty weak,
lately. Too nervous about this decision.
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CHERYL: Nothing to be nervous about. How did your talk with
the Board members go?
STUDENT CHOICE 1: Well, Natalie made it clear that most of
the Board feels we should move as a matter
of survival. They say we’re losing market-share and need to
move closer to the clientele.
STUDENT CHOICE 2: Donald seems to understand how

complicated the situation is, but lost me when he
started talking about debt policies, growth rate in equity, etc.
CHERYL RESPONSE 1: Interesting. Because, when I looked at
the numbers, it seems you may have a
harder time surviving if you do make a move. The sale of the
current property would not be enough to
offset the cost of a move and a new facility in the suburbs, it
seems.
CHERYL RESPONSE 2: It looks like Donald takes the Board’s
responsibility to establish key financial policy
targets very seriously.
STUDENT: I hope you’re planning on explaining!
CHERYL: For sure! Key financial policy targets are things like
you just mentioned: debt policy, and return
on equity. In order to properly plan for the future, to make
strategic and financial strategies, institutions
are starting to take financial feasibility a lot more seriously.
Focusing on key target areas helps keep the
data from becoming overwhelming and useless.
STUDENT: So, you start with a solid debt policy, a decision on
how much we’re willing to allow
ourselves to go into debt?

CHERYL: Actually, you start with growth rate in assets, which
is basically a projection of revenue. What
services or product lines are you expecting to provide over the
next five years and at what level of
activity? Once you get numbers for this, you look at debt
policy. How much do you need to invest to
provide this level of service, and how much of this investment
will you permit to be financed with debt?
STUDENT: That makes sense so far. So, how does equity factor
in?
CHERYL: Equity is a critical part of the equation. You need to
ask, can we generate enough equity to pay
the rest of the investment that is not financed by debt? You
need to look at your return on equity (your
ROE) and divide it by the Reported Income Index.
STUDENT: What is the Reported Income Index?
CHERYL: I’m glad you asked! It’s simply the current net
income (revenue minus expenses), divided by
your current change in equity.
STUDENT: Did you say “simply?”
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CHERYL: I wish they still had that whiteboard in here, I could
show you very easily. For now, just
understand that the reported income index usually balances out
and equals 1.0, and so Return on Equity
becomes hugely important. It’s the primary measure of financial
performance.
STUDENT: And how does our Return on Equity look right now?
CHERYL: Well, because revenue is down due to lower market
share, the operating margin is off and it’s
hurting the return on equity. That’s why, as I mentioned earlier,
a move that required us to take on
more debt without a significant increase in revenue projected,
could sink us.
STUDENT: It’s a lot to consider. I don’t know if I’m really the
right person to help put this all together.
CHERYL: I’m sure you are. Not only are you extremely
intelligent, you have the vantage point that no
other person has. You see the daily operations as well as the
long term vision. You see the numbers that
people like me dump on you, but you aren’t so submerged in
them that you can’t keep the horizon in

sight, too. How about I do this? I’ll send you some top
requirements for effective financial planning and
policymaking. I use it for my students each year and it usually
helps put things in perspective.
STUDENT: That would be great. And thanks for your vote of
confidence. I hope the Board votes the
same way too.
CHERYL: I’m sure they will. Look for an email later, and we’ll
talk more soon!
Scene 5: Reviewing Cheryl’s Email with Natalie
In this scene, the Student receives an email from Cheryl and
reviews it with Natalie via video chat.
Location Student’s Home
Scene setup Student faces laptop on coffee table. Email and
video call appear on laptop.
On-screen characters Natalie Jones
On-screen text: Later that night, you receive the mail . . .
EMAIL Effective Financial Planning
Cheryl Noki [[email protected]]

Hi there!
As promised, here are the top requirements for effective
financial planning
and policymaking that I mentioned earlier:
1. A formally defined limit on debt financing should be
established.
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This is called a debt capacity ceiling. It restricts using debt to
balance
a financial plan to excess. (Note: If relocating the facility puts
you
into more debt than staying put and renovating, you may have to
sacrifice some of your more desired programs in the long run.)
2. Return on investment (ROI) by program area should be part
of the
equation when selecting programs. Too many healthcare firms
are

unable to look at financial analysis by program. They look at
the big
picture and can’t properly determine which programs are most
profitable and which could be cut back or removed to increase
overall profitability. (Note: If you trim unprofitable programs,
you will
increase revenue and help improve solvency, especially if debt
is kept
low.)
3. Non-operating sources of equity should be made part of your
financial plan. Most common examples of these sources are
investment income and gains. Since investment portfolios are
generally large in healthcare firms, a small increase in
investment
yields can reap sizeable income increases. (Note: Putting more
focus
on improving investments can provide a new source of funding
for
the strategic plan of your system.)
Some other key requirements that may seem obvious, but are
often
overlooked are: integrating the financial plan with the

management
control system and updating the financial plan annually.
Integrating the
financial plan into the creation of the annual budget and in
determining
pricing, for example, can help keep the Board focused on
improving
profitability. Also, updating the plan annually will ensure
survival, as
changes in the industry and operations happen more frequently
and a
dependable road-map is needed to stay on track to a better
future.
** I’ll work on some actual numbers to support the above
statements,
don’t worry! We’ll go over them tomorrow, okay? In the
meantime, let
me know if you have any questions.
Have a good night!
Cheryl
The scroll bar and Close Email button flash. When the Close
Email button is selected, the email

disappears.
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ONSCREEN TEXT: You receive a video chat request…
Incoming chat icon flashes in corner of screen, showing Natalie
Jones wants to chat.
When Incoming chat icon selected, the video conversation
between Natalie and student begins.
NATALIE: Hi, I thought you might be up!
STUDENT: Yes, I was just going over some helpful information
from our former CFO.
NATALIE: That is so great that Cheryl is helping you. I just
love her. So, is a good plan starting to take
shape?
STUDENT CHOICE 1: Yes, it looks like moving to the suburbs
is the right choice after all.

STUDENT CHOICE 2: Actually, I’m pretty surprised. Moving
may not be the right answer after all.
NATALIE RESPONSE 1: Really? Are you sure?
NATALIE RESPONSE 2: What makes you think that? You
seemed to think earlier that the majority of
Board members were right.
STUDENT: I won’t have actual numbers until tomorrow, but it
looks like survival doesn’t depend on
moving. It depends on things like keeping debt low and
improving ROI by program, and boosting non-
operating sources of equity.
NATALIE: Interesting. I looked at some estimates earlier and
was starting down the path to relocation,
myself, but now you’ve got me stopping in my tracks.
STUDENT CHOICE 1: You just leave the number crunching up
to Cheryl and me, okay?
STUDENT CHOICE 2: That’s great that you’re getting so
actively involved. What numbers were you
looking at?
STUDENT CHOICE 3: Just remember. Even though it’s the
suburbs, the grass isn’t always greener on the

other side!
RESPONSE TO 1 and 3 (TIMED ONSCREEN TEXT): Are you
sure you want to say that? Better choose
again.
RESPONSE TO 2 (NATALIE): Looking at some similar facility
improvements versus selling our place and
constructing a new place outside the city, there was a big
contrast. Roughly $15 million in debt to
renovate, and nearly $65 million to relocate, and that’s
assuming we get at least half of the proceeds
from the sale of the land. Even with this difference, though, I
figured we’d be on a better track to future
success due to the projected increase in market share that a
move to suburbia would bring.
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STUDENT: Now, what do you think, though?
NATALIE: Now, I think I like the safer road, like you said. And
if we can improve our revenue flow with

the suggestions you just made, I think it will make all the
difference. There is only one problem, though.
STUDENT: What’s that?
NATALIE: Convincing the rest of the Board. Even if you lay
out the numbers, it’s still a judgment call.
Staying put may seem like the safer bet, but there’s no
guarantee the clientele will come, even if we
make renovations and improve programs. Plus, you know how
people get when they’re desperate. They
tend to think only a big, dramatic change will save the day.
They’d rather jump off the ship than go down
with it, you know?
STUDENT: Well, as the Captain, I’d rather keep the ship afloat
than go down, believe me. I’ll work on the
rest of the Board, but I appreciate whatever help you can
provide.
NATALIE: Count on me to back you up, O’ Captain, my
Captain—a little Walt Whitman, there. Thanks for
talking. Goodnight!
Scene 6: Convincing Casper
In this scene, the Student meets with Casper, another Board
member with a strong point of view.

Scene setup Student faces Casper who stands in sitting area.
On-screen characters Casper Diggs
On-screen text: You run into another Board member the next
day . . .
CASPER: <walks up, file folder filled with papers under his
arm> There you are! I’ve been looking all over
for you. I’m Casper. Casper Diggs, from the Board.
STUDENT: I know who you are, of course, Casper. How are
you today?
CASPER: Not good. Not good. I hope you have a minute.
STUDENT: Just a brief one, yes. I have a meeting in a few.
What can I do for you?
CASPER: I’ve been pouring over the numbers from our
financial plan. Look at all this! <indicates papers>
This is frightening.
STUDENT: I appreciate your concern, Casper. But aren’t you--?
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CASPER: A retired foot surgeon, yes. But, the numbers don’t
lie. We need to get out of this run-down
facility before it’s too late. Our volume is dropping, not
increasing like we projected in this plan. As you
know, if the people don’t come, they can’t pay. And if they
can’t pay, we can’t keep our doors open for
long.
STUDENT CHOICE 1: Let me ask you this, Casper. If I had a
sixth toe I needed to remove, would you
recommend I do it myself?
STUDENT CHOICE 2: I understand, Casper. But, I have
changes I’m going to propose to the financial plan
that will make staying where we are and remodeling the smarter
decision.
CASPER RESPONSE 1: What is that supposed to mean? I don’t
think you understand how serious this
situation is!
CASPER RESPONSE 2: You can’t change the financial plan.

It’s a five-year plan! We all agreed on it. We
voted it in last year, remember? I don’t know what you’re
thinking!
STUDENT: Calm down, Casper. We need to remain calm and
try to be open to new ideas.
CASPER: Really? I need some clear answers or I’m going to
recommend the Board bring in an outside
consultant to handle this.
STUDENT: I have hired a temporary outside consultant, Cheryl,
our former CFO, remember? Don’t
worry, Casper. We have it under control.
CASPER: I hope so! <sighs> I’m sorry—I didn’t mean to get so
upset. It’s just—I’ve watched this hospital
struggle through tough times and I’d hate for it to go under
because of a bad decision now.
STUDENT: I feel the same exact way, and I’ll be sure to lay out
the plan clearly before we make any
decision, I promise.
CASPER: Sounds good. I’ll let you go. I know you’re very
busy. But, hey, just let me know if you want me
to take care of that sixth toe, okay? I do a little moonlighting
still. I can just nip that little piggy off, no big
deal.

STUDENT: It was just a metaphor.
CASPER: Whatever you say. Just let me know, though. I’m free
most nights, except Thursdays. See you
later!
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Scene 7: Informal Meeting with Cheryl
In this scene, the Student meets with Cheryl to review the
numbers.
Scene setup Student faces Cheryl on the other side of the desk.
On-screen text: Meeting with Cheryl . . . In your office, after
filling Cheryl in on your discussion with

Casper…
CHERYL: So, are you going to do it, then?
STUDENT: No, I don’t have a sixth toe. I was just using that as
an example!
CHERYL: No, I get that. You were trying to help him
understand that he was a little out of his depth. I’m
sure you appreciate the Board being so actively involved, but
you also want them to be patient while
you have the situation analyzed properly.
STUDENT: Exactly. He was so adamant about not changing the
financial plan. But, according to your
email, you think the plan should be changed annually?
CHERYL: Yes, in order to keep up with changing times, and to
properly evaluate whether the plan is
working, the latest thought is that financial plans should be
updated annually.
STUDENT CHOICE 1: I don’t think I can go through this every
year. No, I think maybe three years is
better.
STUDENT CHOICE 2: That makes sense. But, what good is
updating the plan if no one can understand it?

CHERYL RESPONSE 1: A lot can change in that time. Really,
if you make an annual update part of your
organization’s overall strategy, it will pay off in the future, I
promise. I pushed for this before I left, but
no one wanted to listen. Now, at this critical juncture, I really
think they will.
CHERYL RESPONSE 2: That’s what I wanted to talk to you
about today, something to help bridge the gap
between creating a financial plan and actually using it;
something to integrate the financial plan with
management control. Do you know what “financial ratios” are?
STUDENT CHOICE 1: It’s not a breakfast cereal for
accountants, is it?
STUDENT CHOICE 2: I think they are realistic goals that we
can set for future growth.
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STUDENT CHOICE 3: Aren’t they figures that help us to
determine the accuracy of our financial plan, so

we can make adjustments on an annual basis?
RESPONSE TO 1 and 2 (ONSCREEN TEXT): Not quite. Try
again!
RESPONSE TO 3 (CHERYL): Yes, financial ratios provide the
necessary structure that helps integrate your
financial plan with your management control process. For
example, when assessing your annual return
on equity, you would consider four major ratios: Operating
margin ratio, Total asset turnover ratio,
Equity financing ratio, and Non-operating revenue ratio.
STUDENT: You wouldn’t happen to have those ratios for our
facility, would you?
CHERYL: <laughing> What do you think I’ve been working on?
Of course I do! So, a primary indicator
needs to be established for each ratio, based on the last
financial plan. This is something to measure the
current ratios against. By doing this, we can then see clearly
which areas need improvement. As you can
see here in this chart, we’re a little off in a couple key areas:
NOTE: The following chart appears next to Cheryl illustrating:
Results for this year Primary Indicator Actual
Operating margin 1.3% 1.0%

Total Asset Turnover .93% .93%
Equity Financing .44% .44%
Non-operating revenue 2.7% 2.6%
ROE 8.4% 7.6%
STUDENT CHOICE 1: Yes, it looks like Equity Financing and
Total Asset Turnover are off.
STUDENT CHOICE 2: I see. It looks like Non-operating
Revenue and Operating Margin are off. That
supports what we were talking about yesterday.
CHERYL RESPONSE 1: Are you sure about that?
CHERYL RESPONSE 2: Yes! So, the numbers actually line up
to our tentative plan. Keeping debt low by
renovating the current facility, while boosting revenue by
trimming away unprofitable programs and
boosting profitable programs, plus focusing more on our non-
operating revenue is the best way to
proceed.

Health Care Finance
January 2, 2018
15
STUDENT: Great! I just don’t know if the Board is going to see
it our way. Donald and Natalie are open to
new ideas, I know. But, unfortunately, the rest of the Board
tends to fall into the Casper category.
CHERYL: Yes, they seem quite reactive. But, laying it out
clearly, using these financial ratios will make a
huge difference, I’m sure. Why don’t you try your theory out on
a select few members of the Board
before the retreat? This way, you can test the waters ahead of
time.
STUDENT: Great idea, Cheryl. I appreciate it!
CHERYL: I’m happy to help. Let me know how it goes!
Scene 8: Testing the Plan Out
In this scene, the Student meets Natalie, Donald and Casper in
the conference room and makes the
recommendation to stay. They react favorably, much to the
Student’s relief.

Location Conference Room
Scene setup Student faces Natalie, Donald and Casper at the
table.
On-screen characters NATALIE, CASPER AND DONALD
<NOTE: The chart from the previous scene is projected on the
screen at the end of the table.>
On-screen text: Testing out your recommendation . . .
STUDENT: And, as you can see here, the recommendation to
stay where we are and make
improvements both to the facility and to our financial plan is
supported by these financial ratios.
DONALD: Very interesting. That makes a lot of sense to me. To
tell you the truth, it would be a relief not
to have to move. There’s no guarantee that a big move to the
suburbs would actually pay off.
NATALIE: Right, and now we see a clear path to solving our
financial crisis right where we’re at. I like it.
Especially since we’ll continue to have these financial ratios in
place to help monitor whether the
financial strategy is working or not.
STUDENT: Yes, and we can do it on a yearly basis, too. This

will help us tremendously in the long run.
CASPER: I agree that evaluating the financial plan yearly is a
good thing. I just think that we’re still
missing something here.
NATALIE: What are we missing? Does it have something to do
with the fact that you live in the suburbs,
Casper and were hoping for less of a drive-time to get here?
Health Care Finance
January 2, 2018
16
CASPER: No, of course not! Well, uh, it’s not just me! People
in the suburbs don’t want to have to drive
in to the city all of the time to see their family members. It’s a
real pain, let me tell you.
NOTE: Can select either option to proceed
STUDENT CHOICE 1: When you look at the decline in market
share, it’s really only 2% over the last three
years. I think we can pick that back up easily.
STUDENT CHOICE 2: There’s always public transportation!

RESPONSE 1:
CASPER: So, you think we’ll gain back our market share by
improving the facilities, and we won’t
have to raise prices to make up for it?
DONALD: No, we won’t. We have a long history of providing
top quality services right where
we’re at. We just need to remind people what an important part
of the community we are.
RESPONSE 2:
CASPER RESPONSE 2: No way. I get sick if I ride on a bus for
more than a few minutes.
DONALD: We have a long history of providing top quality
services right where we’re at. We just
need to remind people what an important part of the community
we are.
STUDENT: Yes, Natalie was suggesting a boost in advertising,
and I think you’re both right.
NATALIE: We could even do a grand re-opening and a series of
open houses to draw people back.
Maybe we’ll rent vans and organize free transportation to some
special events, to make it easier for
people to come see us again.

DONALD: These are all very good ideas, and I’m sure they’ll
go over well with the rest of the Board at
the retreat. <to Student> Nice job! Now we can all breathe a
little easier about the upcoming retreat
and be more productive with a clear direction like the one
you’ve laid out here.
STUDENT: Thank you all for letting me test the plan out on
you. See you at the retreat!
Health Care Finance
January 2, 2018
17
Scene 9: Follow-up with Mentor
The Student meets Cheryl in the retirement facility sitting room
again a week later, to report good news.
It’s after the Board retreat has taken place.
Scene setup Student faces Cheryl who stands, holding a greeting
card.

On-screen text: One week later . . .
CHERYL: Hi, I was hoping to catch you! I really appreciate the
“thank you” card and the restaurant gift
card! You didn’t have to do that.
STUDENT: Are you kidding? It’s the least I can do. I hope you
and your husband like Japanese.
CHERYL: Oh, we love this restaurant. Go to it all the time. So,
how do you think the Board retreat went?
I’m hearing nothing but good things from my old friends.
STUDENT: Thanks to all your help, it went even better than I
expected. The Board approved the new
plan on the first day, and we were able to focus on the nuts and
bolts the rest of the retreat.
CHERYL: Great. And I heard Todd was even able to make it to
some of the retreat too, huh?
STUDENT: Yes, but he slipped in the steam room and broke his
collar bone, so yeah, he’s not a happy
camper.
CHERYL: Poor guy. You’ll have a lot to tell him about though,
once he finally gets back, huh? Especially

about the ground you all covered on the relationship between
financial planning and strategic planning.
NOTE: Must select option 1 to proceed
STUDENT CHOICE 1: Yes, the two definitely should go hand
in hand, with the Board and management
actively participating in both.
STUDENT CHOICE 2: Right. From now on, we keep everything
separate. It was far too complicated this
way.
CHERYL RESPONSE 1: That’s right! So, what key financial
policy targets do you plan on focusing on in the
future?
CHERYL RESPONSE 2: I wouldn’t say that. Why don’t you try
again?
Health Care Finance
January 2, 2018
18

STUDENT CHOICE 1: Net working capital, current ratios, and
debt service coverage.
STUDENT CHOICE 2: Growth rate in assets, debt policy, and
return on equity.
1 CHERYL RESPONSE 1: No. That’s not it.
2 CHERYL RESPONSE 2: Yes, good plan. So what new
policies do you think you should consider when it
comes to financial planning?
STUDENT CHOICE 1: We should keep the review process
limited to management and only assess the
plan every two years.
STUDENT CHOICE 2: We should put a formally defined limit
on debt financing, consider ROI by program,
and put more focus on non-operating sources of equity.
1 CHERYL RESPONSE 1: No, not quite. Try again.
2 CHERYL RESPONSE 2: Good! So, what ways can you
integrate financial planning with management
control?

STUDENT CHOICE 1: By using key financial ratios and
evaluating the plan on a yearly basis.
STUDENT CHOICE 2: By using key financial ratios and
evaluating the plan bi-annually.
1 CHERYL RESPONSE 1: Exactly! You really have come a
long way on this journey.
2 CHERYL RESPONSE 2: Close! Try again!
STUDENT: Yes, now let’s hope our clientele from the suburbs
will come a long way to see us after our
renovation is done.
CHERYL: I’m sure they will! If people can drive into the city
for a night at the theater or to visit a favorite
museum, I think they’ll appreciate a top-level facility like yours
and have no problem justifying the drive.
STUDENT: Great points as always. Thanks again for
everything, Cheryl. I’m sure I’ll be calling on you
again for more help!
CHERYL: Any time! Take care!
FADE OUT.

Health Care Finance
January 2, 2018
19
Scene 10: Assessment
If all previous scenes have been completed, a 10-question
assessment is presented to the student.
Answer the following 10 questions to show what you know
about health care ethics for equipment
purchasing. Good luck!
The student answers the questions and then sees the assessment
results.
Assessment Results
Here are your results. Click Save Results if you are satisfied
with the outcome. Or you can click Try Again
if you want to try and improve your score.
NOTE: The student can retry the assessment by clicking the Try
Again button, or can continue to final
scene by clicking the Continue button.
THE END

To Move or Not to MoveScene 1: Meeting Your MentorScene 2:
Input from a Board MemberScene 3: A Call from the
ChairmanScene 4: Digging in with your MentorScene 5:
Reviewing Cheryl’s Email with NatalieScene 6: Convincing
CasperScene 7: Informal Meeting with CherylScene 8: Testing
the Plan OutScene 9: Follow-up with Mentor
PLEASE REPLY TO EACH DISCUSSION WITH
SIGNIFICANT CONTENT. THERE ARE TWO DISCUSSIONS.
DO NOT JUST AGREE WITH THE STUDENT BUT PROVIDE
SUPPORTING CONTENT IF YOU AGREE OR DISAGREE.
THERE ARE TWO DISCUSSION RESPONSE. PLEASE
RESPOND WITH A MINUMUM OF 100 words FOR EACH
DISCUSSION.
Tessa Chandler
Dis2
COLLAPSE
Top of Form
1. What is a composition of functions? What is the difference
between the composition and the product of two functions?
The more simple I try to make the statement of a composition
function the more complicated it sounds. The composition of a
function can be defined as substituting the output of one
function with the input of another function.. The best way to
show is to give an example.
EX:
…function one…F(x)=x+3
…function two…g(x)=5x
the output of g is the input on f(x)
F(g(x))=(5x)+3

1. Write a short paragraph about the number e.
1. The number e is an irrational number It has the property of
being the base of all logarithms introduced in algebra 101. The
e stands for the eulers’ number, named after Leonhard Euler.
The standard value of e is a decimal spanning past 15 decimal
place values. Its first 11 are as follows 2.71828182818.
1. What is common and what is different about arithmetic and
geometric sequences?
1. A geometric sequence is found by multiplying the previous
term by the constant value, whereas arithmetic sequencing is
found by adding a constant term to the previous term. Despite
this difference they have a common trait. They both create a
pattern that cannot be altered, the sequence is set.

Erica Cha
Week 2 Erica Cha
COLLAPSE
Top of Form
1. One can think of “composition of functions” as a function
that takes in its input as another function. That is, if the
function is f(x) = x + 2, the input for this particular function in
the case of “composition of functions” can be another function
like f(x) = x + 4. In this case, the x + 4 will become the input,
producing x + 6 as a result. It is different from the product of
two functions in that the two functions are multiplied, in the
same level, and neither are inputs of the other. I have taken a
course in Computer Science, and there is a concept called
Lambda Calculus. Lambda Calculus also deals with functions
that take in other functions, and it can be said that Lambda
Calculus has a composition of functions as one of its basic
operations.
Also, if one puts a function f(x) as input in its inverse function
f(x)^-1, the output will be x.
1. The number e refers to Euler’s constant (though the e does
not really stand for anything), and it is one of the most
important constants. It deals with the rate of change and can be
found anywhere in nature that deals with continuous growth like
population change. By definition it is (1 + 1/n) ^ n as n
approaches infinity, and, as one can clearly see from the
formula, it is from calculating computing interest. It is
essentially a constant where one would get if he or she were to
get interests on one dollar continuously. It is important in
Calculus as it is the only constant where its derivative is the
same as itself.
2. Arithmetic sequence and geometric sequence are similar in
that they both have a predicted rate of change (difference and
ratio). Also, they can both be easily defined recursively (you
can easily write recursive code in Python). However, they are
different in that if the ratio is smaller than 1 in geometric
sequence (and it does not oscillate signs), sometimes the

sequence approaches certain value.
Bottom of Form
Bottom of Form

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