Description
Module 13: Discussion
Measuring Change
When implementing a change, it is critical to evaluate the change utilizing metrics. Metrics can be
qualitative or quantitative in nature. For this Discussion Forum, think about a time that your organization
(past or present) underwent a major organizational change initiative. Then, analyze and measure that
change using the DICE framework (see the example in Chapter 10 in the TOOLKIT EXERCISE 10.6
example). Discuss that change by calculating the DICE score and discussing the results.
Measure:
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Duration: How frequently was the project formally reviewed?
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Integrity: How capable was the project team leader?
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Commitment of Senior Management: How committed is senior management to the project?
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Local Level Commitment: Do those employees most affected by the change understand the need
and believe the change is needed?
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Local Level Commitment: Do those employees most affected by the change understand the need
and believe the change is needed?
Calculate the Effort score: ________
Discuss the score and the risk category. What were the most concerning sources of risk? What would you
do differently?
Directions:
•
Discuss the concepts, principles, and theories from your textbook. Cite your textbooks and cite
any other sources if appropriate.
•
Your initial post should address all components of the question with a 500 word limit.
•
Reply to at least two discussion posts with comments that further and advance the discussion
topic.
Finance HCM 565
Reply 1 : Dr.Cathy
Cathy Dolan Instructor Manager
RE: Debt to Equity Ratio
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Hello Sarah . . . debt to equity ratio indicates the extent to which a company relies on debt financing
compared to equity financing. A high ratio generally indicates the organization is primarily financed by
debt. This of course yields a higher financial risk due to interest payments and potential difficulties in
meeting debt obligations. Conversely, a low ratio may suggest a lower level of financial risk, meaning
the company relies more on equity financing, which carries no fixed repayment obligations.
Reply 2 : BADRIAH
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Introduction
In the context of healthcare organizations, particularly in Saudi Arabia, the debt-to-equity ratio (D/E
ratio) plays a crucial role in assessing financial health and sustainability. This ratio measures the
proportion of debt used to finance the organization’s assets relative to equity. A D/E ratio of 1.3
indicates that for every 1.3 units of debt, the organization has 1 unit of equity. In the healthcare sector,
maintaining a balanced D/E ratio is essential to ensure the organization can meet its financial
obligations while maintaining stability and growth. This analysis will evaluate the implications of a D/E
ratio of 1.3, identify strategies to improve the ratio, and discuss challenges faced when performing
financial and operational analyses.
Is this a good performance on this ratio?
A D/E ratio of 1.3 is relatively high, suggesting that the healthcare organization is significantly reliant
on debt to finance its operations. While this might be acceptable in industries that require heavy
capital investment, such as healthcare, it does pose certain risks. A high D/E ratio implies a greater
financial leverage, which may be unsustainable if the organization faces difficulties in generating
revenue or in times of financial stress. For example, if the organization experiences a decline in patient
volume or reimbursement rates, the ability to service debt might become challenging. On the other
hand, some investors may view a D/E ratio of 1.3 as a sign of aggressive growth strategy, depending on
the organization’s future prospects and management of debt obligations.
In Saudi Arabia, healthcare organizations often have access to both government and private sector
funding, which could help mitigate some of the risks associated with a high D/E ratio. However, the
organization’s ability to maintain profitability while servicing debt is a key factor in evaluating the
sustainability of this financial structure. Healthcare organizations must balance financial performance
with the high capital requirements needed for infrastructure development, technology, and staff
training, which often leads to higher debt levels.
Actions to Improve (Increase) the D/E Ratio
To improve or increase the D/E ratio, a healthcare organization could consider the following actions:
Increase Debt Financing :The organization could take on additional debt to finance operations or
expansion projects, which would naturally increase the debt portion of the ratio. However, this action
would need to be balanced against the risks associated with higher debt levels. For example, a wellplanned expansion or acquisition strategy that leads to increased revenue could justify additional
debt.
Equity Financing :Another strategy is to issue more equity, either through public offerings or private
investments. This would increase the equity portion of the ratio, thereby improving the overall
financial health of the organization. However, issuing additional equity could dilute existing
shareholders’ control and ownership.
Retain Earnings :A simpler approach to increasing equity is to retain a larger portion of the
organization’s profits rather than paying them out as dividends. By increasing retained earnings, the
equity base expands, which would lead to a higher D/E ratio. This strategy, however, depends on the
organization’s profitability and its ability to generate consistent returns.
Debt Restructuring :Refinancing existing debt to secure more favorable terms (e.g., lower interest
rates or longer repayment periods) can improve financial stability and reduce the burden of debt
servicing, indirectly making it easier to increase debt levels if needed.
Problems Encountered When Performing Financial Statement and Operating Indicator Analyses
When performing financial and operating indicator analyses, several challenges can arise:
Data Quality and Accuracy :Financial statements may contain errors or inconsistencies, especially in
complex healthcare organizations. For example, underreporting or misclassification of liabilities,
assets, or revenues can distort key financial ratios such as the D/E ratio.
Subjectivity in Valuation :In healthcare organizations, intangible assets such as brand value, patient
loyalty, or intellectual property may not be accurately reflected in financial statements. This can lead
to challenges in analyzing the true financial position and risks of an organization.
Comparability Issues :Financial ratios such as the D/E ratio can be difficult to compare across
organizations due to differences in accounting practices, financial reporting standards, or business
models. Healthcare organizations in Saudi Arabia may follow unique regulations or guidelines that
could skew comparisons with similar institutions in other regions.
External Factors :Financial ratios do not account for macroeconomic or industry-specific factors such
as government regulations, changing reimbursement policies, or fluctuations in healthcare demand.
These external elements can significantly impact an organization’s financial performance but may not
be fully reflected in financial statements.
Complexity of Healthcare Operations :Healthcare organizations have complex revenue structures and
cost bases, including government funding, insurance reimbursements, and patient payments. This
makes it difficult to assess the true profitability or debt burden of the organization solely from
financial ratios.
Conclusion
A debt-to-equity ratio of 1.3 in a healthcare organization in Saudi Arabia reflects a significant reliance
on debt for financing operations. While this can be acceptable in certain circumstances, it also exposes
the organization to higher financial risk. Improving this ratio requires a careful balance of increasing
equity or debt, managing retained earnings, and restructuring debt obligations. However, performing
accurate financial and operating analyses can be challenging due to issues such as data quality,
valuation subjectivity, and external economic factors. Healthcare organizations must take these factors
into account when interpreting financial ratios to ensure they are making sound financial decisions for
long-term sustainability.
References
KPMG .)2023( .Financial performance analysis for healthcare organizations: Key ratios and metrics .
Retrieved from www.kpmg.com.
Saudi Vision 2030 .)2022( .Saudi Arabia Healthcare Sector Overview .Retrieved
from www.vision2030.gov.sa.
PwC .)2023( .Debt-to-Equity ratio in the healthcare sector: A guide for financial analysts .Retrieved
from www.pwc.com.
Reply 3: ATHEER
Financial Analysis of Middle East Healthcare Company (Saudi German Health)
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The Middle East Healthcare Company (MEAHCO), operating under the brand Saudi German Health, is a
leading healthcare provider in Saudi Arabia. According to their 2022 financial report, the organization
reported total liabilities of SAR 1,497,000,000 and total equity of SAR 1,500,000,000. This results in a
debt-to-equity (D/E) ratio of approximately 1.0, indicating an equal reliance on debt and equity
financing. Such a ratio reflects a balanced financial structure and aligns with industry norms in the
healthcare sector. Maintaining this balance is crucial for supporting operational activities, capital
investments, and growth strategies, especially under the transformative initiatives of Vision 2030.
A D/E ratio of 1.0 is generally considered good performance for a healthcare organization. It
demonstrates the ability to utilize debt efficiently without over-leveraging, thus maintaining financial
stability. For MEAHCO, this ratio likely supports investments in expanding facilities, acquiring advanced
medical technologies, and enhancing service delivery. However, it is essential to monitor this ratio
continuously. Any significant increase in debt without corresponding revenue growth could expose the
organization to financial risks, especially during periods of economic uncertainty or fluctuating
healthcare demand. A more conservative approach to financial leverage could further enhance
MEAHCO’s resilience in the dynamic healthcare environment.
To improve or increase the D/E ratio, MEAHCO could pursue strategies such as increasing borrowing for
strategic initiatives. For instance, acquiring additional debt could facilitate expansions or technology
upgrades that align with Vision 2030 goals. Another approach would be repurchasing equity, which
reduces the equity base and increases the D/E ratio. Additionally, distributing retained earnings as
dividends would decrease equity while increasing the ratio. However, such actions must be carefully
managed to avoid compromising financial stability or working capital.
Financial statement and operational indicator analyses for healthcare organizations like MEAHCO are not
without challenges. Data accuracy and integrity are critical, as errors or inconsistencies in financial
reporting can lead to misleading interpretations of performance. Industry benchmarking also presents
difficulties, given the variability in accounting practices and financial structures across organizations.
Furthermore, the dynamic regulatory environment under Vision 2030 introduces complexities, as
changes in healthcare policies and market conditions can significantly impact financial performance.
Operational indicators such as patient satisfaction and quality of care, which are essential for healthcare
success, may not be adequately reflected in financial statements, requiring a comprehensive approach to
performance evaluation. Additionally, forecasting assumptions introduce subjectivity and uncertainty
into financial planning, necessitating robust models and continuous reassessment.
In conclusion, MEAHCO’s D/E ratio reflects a balanced financial structure that supports both stability and
growth. While actions to increase this ratio can be aligned with strategic goals, they must be undertaken
cautiously to mitigate potential risks. Financial statement and operational indicator analyses require
careful attention to data accuracy, benchmarking, and regulatory impacts to ensure meaningful insights.
MEAHCO’s strong performance demonstrates its ability to navigate financial challenges effectively,
contributing to the broader healthcare objectives outlined in Vision 2030.
References:
Middle East Healthcare Company (MEAHCO). (2022). Annual Report 2022. Retrieved
from
Policy HCM-550
Reply 1: Maram
The Process of Policy Development, Implementation, and Modification
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The Process of Policy Development, Implementation, and Modification
Policy development is a complex and multifaceted process that often involves various stages, from
conceptualization to evaluation. While many models of policy development conceptualize it as a linear
process, in practice, it is rarely straightforward. The process often involves overlapping stages,
adjustments, and feedback loops as policymakers respond to new information, changing conditions, and
unforeseen challenges. In this regard, the stages of the policy process can often occur simultaneously or
be revisited multiple times throughout the cycle.
Policy Development in Healthcare
1. Problem Definition: In healthcare, this stage typically involves identifying significant issues such
as lack of access to healthcare, disparities in healthcare delivery, rising healthcare costs, or
inadequate infrastructure(Pollack Porter et al., 2018). Policymakers use data from health
assessments, studies, and public consultations to define the scope of the problem (e.g., the
increase in chronic diseases or gaps in mental health care).
2. Agenda Setting: Issues like pandemics (e.g., COVID-19), the rising cost of pharmaceuticals, or the
need for healthcare reforms often come to the forefront due to public pressure, media attention,
or the influence of healthcare advocacy groups. These issues demand political action and are
prioritized based on urgency, such as the need for urgent healthcare reforms or the
implementation of national health insurance.
3. Policy Formulation: This phase involves formulating specific solutions to the identified problem.
For example, in the healthcare sector, the policy could be aimed at improving healthcare access
through public insurance, expanding health services in rural areas, or introducing new preventive
health programs. Health experts, economists, and stakeholder groups (e.g., hospitals, insurance
companies, patient groups) provide input during this phase to ensure the proposed solutions are
practical, effective, and evidence-based.
4. Decision-Making: After various alternatives are analyzed, the decision-making process selects
the most feasible and politically acceptable policy solution. For instance, legislators might choose
between different methods for increasing healthcare access, such as expanding Medicare,
introducing a single-payer system, or incentivizing private insurance.
5. Policy Implementation: Once the policy is selected, the focus shifts to implementing the plan.
For healthcare policies, this may involve creating new government programs, adjusting insurance
schemes, funding healthcare initiatives, or rolling out nationwide health campaigns.
Administrative bodies, such as health ministries or regulatory agencies, play key roles in
overseeing the implementation. The effectiveness of implementation often depends on the
available resources, the involvement of healthcare providers, and the cooperation of
stakeholders (e.g., insurers, hospitals).
6. Evaluation: After implementation, it’s essential to evaluate whether the policy meets its
objectives, such as improving access to care or reducing health disparities. This is done through
monitoring outcomes (e.g., reductions in mortality rates, improvements in care quality) and
adjusting policies as needed based on feedback. Evaluations help identify gaps and areas for
improvement in healthcare policies.
Transition from Healthcare Policy to Legislative Proposal
In the healthcare sector, once a policy has been conceptualized, the next step is turning that policy into a
legislative proposal. This transition often involves drafting detailed legislation that aligns with the
proposed policy (World Health Organization, 2012). For example:
•
Drafting the Proposal: If the policy focuses on expanding healthcare access, the legislative
proposal would include specific mechanisms for eligibility, funding sources (e.g., taxes or budget
allocations), and the roles of public and private insurers.
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Stakeholder Engagement: Healthcare proposals often involve consultations with key
stakeholders, including medical professionals, health advocacy groups, insurers, and the general
public, to ensure that the policy is well-rounded and acceptable.
•
Legislative Process: Once drafted, the proposal is submitted to the legislative body (e.g.,
Congress or Parliament). The policy goes through stages such as committee discussions, debates,
and amendments before it is voted on and passed into law.
•
Enactment: If the policy proposal is passed, it becomes law, and the policy is enforced through
governmental programs and regulations.
Conclusion
In healthcare, the policy development process involves several stages that are similar to those in other
sectors, with an emphasis on improving public health outcomes, reducing disparities, and ensuring
sustainable health systems. The transition from policy to legislative proposal is particularly critical, as it
ensures that policies are legally binding and can be effectively implemented. The challenges in
healthcare policy often involve balancing the needs of various stakeholders, ensuring financial feasibility,
and adapting to changing public health conditions.
References
Buttow, C. V. (2024). Data-Driven Policy Making and Its Impacts on Regulation: A Study of the OECD
Vision in the Light of Data Critical Studies. European Journal of Risk Regulation, 1-19.
Pollack Porter, K. M., Rutkow, L., & McGinty, E. E. (2018). The importance of policy change for addressing
public health problems. Public Health Reports, 133(1_suppl), 9S-14S.
World Health Organization. (2012). Public health policy and legislation instruments and tools: an
updated review
Reply 2: SAHAR
Health Systems and Delivery in the Kingdom of Saudi Arabia: Policy Development, Implementation,
and Legislative Transition
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Health Systems and Delivery in the Kingdom of Saudi Arabia: Policy Development, Implementation,
and Legislative Transition
Policy development and implementation in the health sector is of utmost importance in any country, as
it pertains to the various needs of its population. In the KSA, this process operates in a number of steps
to ensure that health policies match the national goals of health, efficiency, and equity. The paper will
outline the health policy development process, its implementation, modification, and transitioning from
policy to legislative proposals within the Saudi health system.
Policy Development Process
The process of development of health policy in the country starts with identification: the identification of
the need for reform and identification of key health issues. Issues in health are usually raised through
various health assessments, surveys, and consultations with health professionals. Once a problem is
identified, it is conceptualized into a potential policy solution. For instance, the introduction of Saudi
Vision 2030 has introduced multiple health reforms that have enhanced the quality of healthcare
services, ensured more efficiency, and increased access to healthcare services (Rahman & Al-Borie,
2021).
After identifying a problem, policymakers analyze possible solutions to the problem. This is usually
debated within the MOH and other relevant health organizations. Data from hospitals, clinics, and
research institutions are usually collected regarding the effectiveness of the different policy alternatives.
The decision-makers may prioritize the solutions based on the cost-effectiveness of the solution,
feasibility, and potential impact it may have. Once the solutions are prioritized, the best solution is then
adopted. This may be in the form of new healthcare programs, policies for reform, or changes in the
delivery methods of healthcare. For example, the MOH may adopt policies for EHR systems that may
improve healthcare delivery through improved communication between healthcare providers and
patients.
Implementation of Health Policies
The implementation of policies in Saudi Arabia is a critical stage towards the realization of ideas into
practice. This stage would entail the required resources, budget allocation, and training of health
professionals with regard to new initiatives that are being proposed. For EHR systems, for example, the
MOH shall liaise with hospitals and clinics to install the necessary software required, train staff, and then
ensure that the system works appropriately. Implementation requires monitoring and evaluation. In
Saudi Arabia, internal and external audits measure the efficiency of policies already implemented.
Feedback from healthcare providers, patients, and administrators contributes to adjustment by
policymakers for increased effectiveness of the policy (Alshehri et al., 2023).
.
Modification of Policies
Most of the health policies within Saudi Arabia are constantly changing due to emerging challenges,
changing population needs, or new scientific evidence. For instance, a policy on access to health care in
rural areas might be revised if initial strategies turn out ineffective. Modifications could entail
reassessment of the set goals, updating the budgets, or even introducing new technologies to enhance
the service delivery.
Transition from Policy to Legislative Proposal
The final stage of the health policy process involves the translation of policy into a legislative proposal.
Once a certain policy has been fully developed and tested, it can be presented or proposed to the Saudi
Arabian legislative body, for instance, the Consultative Assembly; the Shura Council. This phase legal
experts will draft a proposal, translating the policy into a legal format that aligns it with the laws and
regulations of the kingdom. The proposal is then discussed and debated by the legislators, who may
propose amendments or changes before its passage. For instance, the recently expanded health
insurance law for all its citizens and residents was finally passed in 2019 after a long policy-making
process followed by a legislative proposal which was approved by the Shura Council.
Conclusion
In the Kingdom of Saudi Arabia, health policy development, implementation, and change are
accomplished within an energetic, multistep process directed toward an enhanced healthcare system.
Transitioning from ideas to the stage of policy proposal to legislating these proposals is important,
ensuring that reforms are doable and in compliance with the laws while also integrating them into the
bigger picture of national development goals. The same processes will prove instrumental as Saudi
Arabia moves on with upgrading its health care system for effective, fair, accessible services.
References
Alshehri, A., Balkhi, B., Gleeson, G., & Atassi, E. (2023, September). Efficiency and Resource Allocation in
Government Hospitals in Saudi Arabi: A Casemix Index Approach. In Healthcare (Vol. 11, No. 18, p. 2513).
MDPI.
Rahman, R., & Al-Borie, H. M. (2021). Strengthening the Saudi Arabian healthcare system: role of vision
2030. International Journal of Healthcare Management, 14(4), 1483-1491.
Reply 3: Dr.Tillman
Sarah,
In the Kingdom, medical devices and pharmaceuticals must undergo a regulatory approval process for
placing devices on the market which is closely managed and monitored like that of European Union and
United Kingdom processes. The process is managed by the SFDA and have issued a guideline note for the
submission process. The approval process takes around 35 working days with license fees ranging
between KSA 15,000-25,000. An existing authorisation or certification in Australia, Canada, Japan, the
United States or the EU/UK will simplify the process.
The State is also seeking to encourage to foreign pharmaceutical manufacturers to enter into publicprivate partnerships and joint ventures with Saudi companies to increase production locally.
Investing in healthcare in Saudi Arabia: new regulatory framework This article discusses the substantial
public investment within the Saudi market and points out the significant opportunities for health sector
investors.
Dr. Tillman
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