Question

Discuss what changes would have to be made to a financial forecast if a hospital were investor-owned versus being a non-profit.

Answer 1

If hospital is a non profit organisation, majority of its income are generated through donations and majority of its expenses are given through charitable expenses like free treatments to many of the patients.

When hospital turns from non profit organisation to a investor owned which is getting listed and working for the betterment of Investor by providing ample profit to them then,it has to do a lot of financial planning and investment in order to gain from them which will maximize the shareholders wealth

an investor owned hospital will look for generation of his income through fees and different type of supplies which are made to patients and different type of services which are provided to patients.it's majority of expenses would be the salary which would be paid to staff and operating expenses.

It will have to maintain the books of accounts of profitable company which is owned by investor. it will also have to maintain cash flows as per different kind of rules and regulations specified by accounting standards for a profitable company.

The financial forecast of a company would change dramatically as it will be working primarily for the profit making business while earlier it was working for the societal cause so, the financial forecast will be tremendously on the profit making side, as it will turn into a profitable organisation which is working for the betterment of the investor and maximization of the wealth of the investor.

the growth rate of these companies would be accounted and it would be quantified into its profits so overall the profits of the company will change dramatically on the higher side.