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Partners Healthcare

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Partners Healthcare Case Study

Partners Healthcare is considering the introduction of real assets into the organization’s portfolio. The analysis will demonstrate the effects of having one risky asset and one risk-free asset in a portfolio. Our analysis will also show that the introduction of real assets can decrease the risk of the hospital’s portfolio. Each hospital in the healthcare system can determine the appropriate portfolio mix based on their desired expected level of return and risk they are willing to accept. In the case for a hospital it is crucial that it manages donated funds properly so the hospital can continue to operate even if its income from operations is negative.

Using the STP (short term pool) that Manning had put together with his management team that overseen it, he had decided that to use this as the risk-free part of their holding, where the STP (investments averaging from 1-2 years in length) average return was 3.2%.

With the LTP (long-term pool) they had investments in risky assets which were mainly different forms of equity which were overseen by more than 30 multiple asset management firms. While they also had a small fixed income segment in the LTP that had been invested in primarily high-quality long-term bonds.

There are two ways the hospital can plan to invest, with a few different rationales behind them. The hospital can choose to invest, either very conservative and continue to operate while accepting minimal risk , where operations at the hospital may be a deciding factor in whether or not the hospital makes a profit or a loss. The other way they can choose to invest would be to invest in risky portfolios which could return 9% more per portfolio and their dependency on operations in the hospital is not as heavily weighted on the financial success of operations. If Partners were to invest in high risk high return

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