Healthcare Finance

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Nameof Student

HealthcareFinance: Outline



I.Factors affecting quality of healthcare

A.Finances of both the institution and the patient

B.Availability of resources

C.Personal attributes of the healthcare provider and the patient

D.Healthcare policies by the government


II.Healthcare Service Provider

A.Vertex Pharmaceuticals

B.Company information




C.Contribution to the healthcare field


III.Opportunities to be explored by company

A.Educating the people

B.Provide free medication to the people

C.Preventive medication


a.Further research to be carried out


I.Financial and Budgetary Considerations

  1. Financial statements and Budgetary Implications

  2. Flexed vs. Fixed

II.Ratio selection

A.Ratio Results

B.Short and Long Term Impact


TheQuality of delivery healthcare is the product involved with propercoordination among patients and healthcare staff which takes place ina setting that is supportive.Some of the factors that may affect the quality of healthcareservices include factors pertaining to the healthcare organizationsuch as finances, leadership and management and the variousbureaucracies that the hospital has in place. Other factors thataffect the delivery of the healthcare include the personal attributesof the patient and those of the hospital staff. Valuable healthcareservices need consistent improvement whereby by proper coordinatedplanning, resource availability and proper management of the saidInventory and cooperation among the providers in a manner thatbenefits the patients.

Oneof the major factors that affect the delivery of healthcare is thefinancial status of the patient. Healthcare is very expensive formost patients particularly those who do not have insurance.Therefore, most of the patients are forced to forego some servicesthat they are unable to afford yet may be crucial to theirwell-being. Most citizens are advised to have insurance so that theycan access healthcare services that may be hard to afford using cashat any time. Besides, emergencies may arise and it is advised thatone always has insurance to cater for such events. Whenever a patientcancels treatment since they cannot afford the associated costs, thentreatment is unlikely to be effective. This is a major problem inmost countries of the world among people living in poverty. Financesof the healthcare organization may also affect the type of servicedelivery such as the number of doctors available in the healthfacility, the number of nurses attending to the patients. Whenever ahospital does not have and adequate number of nurses and doctors thenit means that patients visiting the hospital will not receive qualityservices since the staff available is overworked and probably gettingvery low wages. Proper finances are required both by the hospital andthe patient for quality healthcare services.

Anotherfactor that affects the delivery of healthcare services is thepatients. For quality healthcare services to be realized, the patientought to follow all the instructions that they are given so that theycan heal properly. For instance, when a patient is advised not totake a particular kind of food, then they are supposed to followthese instructions with utmost care. This will again depend on thelevel of education and the literacy of the patient a patent who isliterate will understand the importance of the doctor’sinstructions and will most likely follow them to the latter asopposed to a patient who does not understand the importance of this.This will also pertain to how they take the medicine that has beenprescribed to them. The quality of care that a patient receives willbe dependent on their responsibility and the people around them.Their knowledge about their rights will determine their expectationsof the kind of care they should receive at any healthcare facility. Apatient who is not responsible will most likely not take care ofthemselves as they should.

Thehealthcare system in any country determines the quality of servicesthat patients receive. Governments have the responsibility ofavailing quality healthcare services to its citizens. A governmentthat has rules and regulations in place that protect the interest ofthe patient will most likely ensure that patients receive highquality services. Poor quality and expensive healthcare services arelikely to be experienced in a country where the Government is notstringent on the practices of the industry. The rules and regulationsput in place impacts on the type of service delivered to thepatients.


VertexPharmaceuticals is located in Boston Massachusetts and was founded inthe year 1989. The founders include Joshua Boger and Kevin Kinsella.The mission of the company is to create new opportunities in thefield of medicine to improve the lives of people by treatment ofillnesses. The vision of the company is to change the lives of peopleliving with serious illnesses and those of their families andcommunities. The company has a wide range of specialists includingresearchers, doctors and experts in public health.

Inthe year two thousand and four, the company concentrated on viralinfections, cancer, auto-immune disorders and inflammatory illnessesin two of its research facilities in California and Oxford. By theyear 2009, there were 1,800 employees working for the company. VertexPharmaceuticals has been listed among the top 15 companies with thebest performance on the Standard &amp Poor’s 500 since 2011.Within the same period, the shares of the company have also increasedto 250%. The company has programs that cater for cystic fibrosis aswell as more research programs that are aimed at other seriousillnesses.



Vertexpharmaceuticals have a lot of opportunities to be explored. Thecompany majorly focuses on changing the lives of people with seriousillnesses such as cancer. More and more people are being diagnosedwith such diseases in the world today due to the lifestyles that havebeen adopted. Many people particularly in the third world countriesare increasingly being diagnosed with such illnesses that are soexpensive to treat. The company can come up with suitable subsidiesto cater to the people who are unable to afford treatment of theirdiseases. In addition to the treatment, the company can conducttrainings on family members and communities on how to care for suchpatents so that they can live more comfortably and possibly forlonger. Since some of these illnesses are in the genes, it should bepossible to test people who are more susceptible to them and offer arange of treatment that would prevent them from getting it. This canalso be adopted as part of social corporate responsibility of thecompany to the people.

Vertexpharmaceuticals can also take the opportunity of educating members ofthe public n how to void such diseases, how to take medicine shouldthey be diagnosed by the illness. They could even take a step furtherby hiring workers who would go out to the people, particularly thosethat have been diagnosed by the illness and help them with theirtreatment plan. They should follow up with the patients to ensurethat medicine is taken on time and in te right quantity as this isthe only way that it will be effective. They should also take theresponsibility of following up with the healthcare provider ofpatients to ensure that the drugs are taken accordingly.

Furtherresearch should be conducted as new illnesses arise all the time.Continuous research would ensure that the company produces drugs thatare more user-friendly and also work on getting maximum governmentsupport.


Financialbudget considerations and proposal justifications:

Fromthe information presented by Vertex Pharmaceuticals, it is very clearthat the organization has many opportunities to explore. To actualizeon these opportunities, the financial section is a crucial area thatneed attention. Various financial statements therefore needutilization. Based on its annual report, the income statement andbalance sheet needs utilization. In addition to this, the statementof retained earnings and statement of cash flows does not needunderestimation. The income statement is important is it indicatesthe direction of the firm in terms of profit making. VertexPharmaceuticals does not wish to make any loss in its operation. Itindicates the breakdown of the enterprise revenue and expenses andthis will enable it to minimize the cost as much as possible in orderto maximize profit. The balance sheet will also be important in myproposal as it will indicate the capital, liabilities and the assetsof the business. This will enable the management in making decisionson how to add more resources and minimize liabilities. Other crucialfinancial statement is the statement of cash flows, as it will showcash from operating, financial and investing activities.

Theproposal will increase additional costs to the company, as thecompany will try to offer subsidies to the patients who undergoesdiagnosis. In addition, training is also a program that needs costfor it to undergo implementation. Since the healthcare need toimprove efficiency and becoming updated, research costs will beincurred to actualize the proposal. The proposal requirements canaffect the financial statements positively or negatively. If theseprograms are well implemented, they will add more patient due to theeffectiveness created. However, a wrong idea which cannot help thefirm will negatively affect the financial statements leading to aloss or decline in profit because of more increasing costs.

Fixedbudget is the one that does not change regardless of the currenthappenings while flexible budget is the one, which provides room foremerging issues. If fixed budget is prepared by vertexpharmaceuticals, the approximations must be provided at the initialstage. Flexible budget will allow more room for change in ourproposal as additional costs may arise in the process. Fixed budgeton the other hand will not be suitable as it may cause delay in theimplementation due to misallocation and inadequate funds (AM, 2014).Due to the emerging costs, budgeting will need more money, asfrequent changes will not be possible to avoid.

Thefollowing ratios will be in use to support the proposal: gross andnet profit ratios, current ratio and the return on capital employed.The gross and net profit ratio will be useful as an indication ofwhere the profit is declining or not because of the new proposal.Current ratio will be able to compare the current assets and thecurrent liabilities due to implementation of the proposals. Thereturn on capital employed will indicate the results of theapplication of funds.

Wewill consider the recent data of 2016 when calculating the ratios asthey provide more information that is relevant.

Grossprofit ratio = gross profit/revenue*100%.

$1,491,717/1,702,177*100%= 87.64%

Netprofit ratio = Net profit/revenue*100%


Currentratio = current assets / current liabilities

1,851,540/792,537*100%= 2.34

Returnon capital employed= Earnings before interest and tax/capitalemployed * 100%

14,066/2,896,787* 100% = 0.49%

Theviability of the proposal is in jeopardy from the above ratiosprepare. Vertex Pharmaceutical does not have adequate funds toimplement it. Borrowings will add more liabilities hence lowering thecurrent ratio (Smith, 1985).

Theshort-term impact of the company is its inability to make profits. Ifthe current proposal goes through implementation, this will strainmore resources. The financial statements will not look healthy.However, if the proposal is well implemented, the long-term impactwill be positive due to increased efficiency and more revenuecollection from customers.


AM.,M. (2014). Why TQM does not work in healthcare organizations. Int JHealth Care Qual Assur., 27:320–35. .

DavidM. Orenstein Paul M. Quinton Brian P. O`Sullivan Carlos E. MillaMark Pian et al. (9 July 2012),&nbspLetterto Jeff Leiden, CEO of Vertex Pharmaceuticals&nbsp(PDF),retrieved&nbsp24February&nbsp2017

JosephWalker Jonathan D. Rockoff (November 19, 2014),&nbspCysticFibrosis Foundation Sells Drug’s Rights for $3.3 Billion: TheBiggest Royalty Purchase Ever Reflects Group’s Share of KalydecoSales,Wall Street Journal,retrieved&nbspFebruary24,&nbsp2017.

SmithG, C. C. (1985). Assessing health care: A study in organizationalevaluation. Milton Keynes: Open University Press

U.SSecurities ans Exchange Commission. (2017). Vertex Pharmaceuticals.Retrieved February 24, 2017, from U.S Securities ans ExchangeCommission:

VertexPharmaceuticals. (2017). ScienceOf Possibilities.Retrieved February 24, 2017, from Vertex Pharmaceuticals: