HCA312 Assignment: Comparative Data Analysis in Healthcare Finance

This assignment provides a detailed analysis of comparative data in healthcare finance, covering key concepts such as common sizing, trend analysis, forecasting, and the importance of comparability. The solution explains these concepts with examples, differentiating between forecasting and projecting, and outlining the three common types of forecasts used in healthcare. It also discusses the criteria for true comparability, the elements of consistency, and the importance of comparative data in healthcare management. Furthermore, the assignment highlights the four common uses of comparative data, including comparisons to budgets, prior periods, other organizations, and industry standards. The solution also clarifies standardized data and provides references for further study, offering a thorough understanding of financial analysis techniques in the healthcare sector.

HCA312 Week 4 Assignment
Comparative Data
Prior to beginning this assignment, review Chapter 14 and 15 in the course textbook, Health
Care Finance: Basic Tools for the Nonfinancial Managers, 5th edition. These two chapters will
assist you in responding accurately to the questions in the table.
Instructions:
Complete the following table by writing detailed and thorough responses to the questions.
Provide examples where indicated. Once the document template is completed, you should have
at least two pages. APA formatted citations and references are required. Cite the sources per in
the narrative and list the reference in the last box of the table.
What is meant
by common
sizing?
Provide an
example:
Common sizing is the process which is used to convert the dollar amount into the terms
of the percentages. The method of the common sizing is to keep the comparison at the
same base level. In simpler terms it is also known as the Vertical analysis.
For example if the current liabilities of the X hospital is $200000 and the long term debt
is $400000 which equals to the total liabilities of $600000 than current liabilities are 33%
and the long term debt is 67% (Drummond, et al 2015).

What is meant
by Trend
Analysis?
Provide an
example:
Under the mechanism of the trend analysis there is a comparison of the figures over the
several time period. The only difference between common sizing and the trend analysis
is that the comparison is across time. Trend Analysis is nothing but the horizontal
analysis in the financial terms (Cleverley & Cleverley, 2017).
For example if the current liabilities of the X hospital are $500000 in the current year and
the long term debt is $500000, the total liabilities amount to $1000000. The difference
between the previous year and the current year is $300000/$200000 equals to 150%
change in the current debt in terms of the previous year.
What is the
difference
between
forecasting and
projecting?
Forecasting and Projecting are the methods used in analysis of the financial statements.
Though both are prospective in nature yet there are certain differences between the
forecasting and the projecting which are as follows.
Forecasts are formed on the basis of the assumptions and Projections are the ideas
relating to the future.
Forecasts reflect actions which are going to occur in future while the projections assist in
future events (Drummond, et al 2015).
What are the
three common
types of
forecasts in a
Healthcare
Organization?
The most common types of the forecasts utilized in the healthcare sector are the revenue
forecast, staffing forecast and operating expense forecast (Cleverley & Cleverley, 2017).
Name the three
criteria that must
be met for true
Comparability is met only when the three important criteria are met. The three criteria
are consistency, verification and unit measurement.

comparability.
Discuss each.
Consistency: Consistency is necessary to compare the data as it will define the true
results accordingly.
Verification: the data needs to be reasonable and verified otherwise the authenticity of
the data cannot be checked or reviewed.
Unit Measurement: the monetary unit used for the measurement shall be same in case
of the comparison as it can create huge differences.
What elements
of consistency
should be
considered?
Provide an
example:
In general there are three elements such as time periods, consistent methodology and
Inflation factors. All the three elements are equally important as in case of the time
periods to understand the fact that a comparison can be made only within the same time
frame for example 10 month period. In case of consistent methodology the method of
valuation shall be same such as either LIFO or FIFO (Cleverley & Cleverley, 2017).
Discuss the
importance of
comparative data
and explain the
healthcare
manager’s
responsibility
when comparing
data
Comparative data is important as it reveals the current position of the company or firm
with respect to either previous year or future year.
The main role or the responsibility of the healthcare management is to put into the
application the elements of the consistency. As the data is used by the people for the
purpose of the decision making the data needs to be in the comparable situation. The
main responsibility also includes the comprehensive review of the data (Stiglitz &
Rosengard, 2015).

Name the four
common uses of
Comparative
Data.
Discuss each.
Comparison of current expenses to current budget
The current expenses shall be compared against the current budget to find out the
variances happening in the department, division, or unit to program the current budget.
Comparison of current actual expenses to prior periods (Ashford, 2018).
Comparison within the organization
The comparison is necessary to find out the gaps and the variances that can be changed
after analyzing the financial statements with regards to the previous year.
Compare to the other organizations
The comparison against the other organizations will help the managers to get the
strategies and the position of the company against the competitors. The comparison will
help the management in making decisions that could benefit them
Compare to the industry standards
The industry standards are the benchmarks against which the company has to perform so
that the company has agenda as to where the company is operating at present and where
it wants to reach in future.
Explain
Standardized
Data
Provide an
example.
The standardized data is the process of processing the data that shapes the data of the
different shape and size into the similar data format.
For example the entire four instruments in the CMS training had different items relating

to the types of eating and each was referred with the different word. Standardization
makes sure that the wording as well as the intent is same in each of the case.
List your
References:
REQUIRED
Ashford, (2018). USES OF COMPARATIVE DATA Retrieved from
https://content.ashford.edu/books/Baker.6866.18.1
Cleverley, W. O., & Cleverley, J. O. (2017). Essentials of health care finance. Jones &
Bartlett Learning.
Drummond, M. F., Sculpher, M. J., Claxton, K., Stoddart, G. L., & Torrance, G. W.
(2015). Methods for the economic evaluation of health care programmes. Oxford
university press.
Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the public sector: Fourth
international student edition. WW Norton & Company.