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Intermediate Macroeconomics – 2020F (ECON-301-002)

Phase V: Controlling

(Chapter 7: The Quality Imperative: Theory; Chapter 8: The Quality Imperative: Implementation; Chapter 11: Controlling & Allocating Resources)

Overview: The controlling function of management involves gathering information and monitoring activities and performance, comparing actual results with expected or desired results, and when appropriate, intervening to take corrective action. Controlling is a function of managers at all levels, and its basic purpose is to ensure that what is intended is done. Quality control, infection control, performance improvement, risk management, cost control, utilization review,
narcotics control, budgets, position control of staffing levels, and credentials review are all control or control-like activities.

Analyze the controlling function of your HSO by addressing the following areas:

  • Information Systems and Control
    • Investigate the type and effectiveness of the organization’s information technology
      • What information technology is implemented?
      • Do the HSO use EHRs?
      • Consider MDSS, CSS, CDSS
  • RM and Quality Improvement
    • Examine productivity controls in place
    • Examples:
      • Control charts
      • Benchmarking
      • Supply Chain Management
      • Inventory control
      • Materials Management
    • Evaluate quality practices such as TQM, Six Sigma, ISO, other systems
  • Financial Statements

The two most important financial statements are the income statement and balance sheet. Both statements enhance management’s ability to monitor and control the organization’s financial situation by using ratio analysis. Financial statements are prepared according to generally accepted accounting principles (GAAPs), which enable investors (for-profit HSOs) and lenders to compare and understand the HSO’s financial performance.

(Read the Balance Sheets, Income Statements, and Statements of Cash Flow article for more information)
✓ Analyze Financial Documents- profit and loss (income) statement and balance sheet:

  • First, collect at least two years of financial statements of your HSO
    • Profit and Loss (income) statement analysis
      1. What is the total revenue, total costs of revenue, and net income for each year?
      2. What could be the reasons the numbers changed over the two years?
    • Balance Sheet Analysis
      1. What are the total assets, liabilities, and shareholder equity for each year?
      2. What could be the reasons the numbers changed over the two years?

**The analysis of both statements should be discussed and a graph or chart can be used to reflect the differences in the two years**

✓ Financial Ratio Analysis:
Financial ratio analysis calculates and evaluates various indices that measure HSO/HS risk exposure, activity, profitability. Calculate and evaluate the liquidity ratio and profitability of your HSO from the two years of statements using the following two ratios:
Liquidity ratio

  • Current ratio: total current assets/total current liabilities (a current ratio greater than 1 means the company has enough assets to cover all current liabilities should the need arise

Profitability ratio

  • Operating margin: (operating revenue-operating expense)/operating revenue

**Analyze, compare and contrast the difference in ratios over the two years. A graph or chart can be used to reflect the differences in the two years**

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