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Financial Comparsion

In: Business and Management

Submitted By tvcarter
Words 366
Pages 2
The managed care industry is growing rapidly across the country in every state. Chesapeake Health Plans is one of Virginia’s largest managed care organizations with more than 400,000 members in 15 counties (Gapenski, 2010). The facility covers different products such as HMO, PPO, and POS to accommodate the sick and elderly in the state of Virginia. With all the different financial issues going on with healthcare, Chesapeake has proven to be stable in past years with 85% of the financial business in HMO’s (Gapenski, 2010). As the case study states, premium revenue as well as enrollment increased within one year (2008-2009) of the start of business.
When you look at Chesapeake’s financial statement you will find that their total assets were up by $13.6 million in 2009 which led the total margin ratio to be approximately 5.9% with the greatest competitor coming in at 5.8% and the state average at (3.9) (Gapenski, 2010). By using the current ratio formula, the current ratio for 2008 is 1.38 and 1.45 in 2009 which is above the upper quartile at 1.29. With Chesapeake’s administrative ratio cost at 13.2% 2008 and 13.6% in 2009 it wasn’t a big difference on their financial cost for administration but shows that the company may want to look at how they are managing their administration. Overall the company has done well with the administrative ratio cost because they are below most of the competitors except for WellLife. The company took more a loss with their Medical with a 2.2% difference.
Chesapeake Health Plans have compared well with their competition. Their ratios on medical loss and administrative loss have slightly stayed around the same and on average have fair very well with their competition. The company would need to look at the company’s current ratios to ensure they are affectively utilizing the money that the company is producing. Chesapeake Health Plans future looks well but the company will need to make sure it margins stay above or even average with their competitors to continue to grow.
Reference
Gapenski, L.C. (2010). Cases in Healthcare Finance (4th ed). Chicago, IL: Health Adminstration Press.

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