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London Bridge Hospital’s Management Culture and Balanced Scorecard

London Bridge Hospital’s Management Culture and Balanced Scorecard

London Bridge Hospital Case Study

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London Bridge Hospital Case Study

London Bridge Hospital is a private hospital from south London along River Thames. The key noticeable strategic approach of London Bridge Hospital is in the management culture. The hospital has more centralized authority, and the relationship between the subordinates and their superiors is more towards the personal end. In addition, the institution is open to the mistakes being pointed out and acceptance thereof. The hospital has evolved over time. In a recent survey, decision makers from the hospital advocate the use of Balanced Scorecard. Through the use of this system, the treatment charges and referral rates by determined the demographic characteristics of the patients.

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London Bridge Hospital CashFlowFlag INCOME STATEMENT
Fiscal year ends in December. USD in millions except per share data. 2013-12 2014-12 2015-12 2016-12 2018-12 TTM
Revenue 4375 5505 6780 8831 11693 11693
Cost of revenue 3083 3753 4591 6030 7660 7660
Gross income 1291 1752 2188 2801 4033 4033
Operating expenses
Research and development 379 472 651 852 1053 1053
Sales, General and administrative 684 877 1231 1569 2142 2142
Total operating expenses 1063 1349 1882 2421 3194 3194
Operating income 228 403 306 380 839 839
Interest Expense 29 53 133 150 238 238
Other income (expense) -28 -31 31 -115 -115
Income before taxes 171 349 142 261 485 485
Provision for income taxes 59 83 19 74 -74 -74
Net income from continuing operations 112 267 123 187 559 559
Net income 112 267 123 187 559 559
Net income available to common shareholders 112 267 123 187 559 559
Earnings per share
Basic 0.28 0.63 0.29 0.44 1.29 1.29
Diluted 0.26 0.62 0.28 0.43 1.25 1.25
Weighted average shares outstanding
Basic 407 421 426 429 432 432
Diluted 425 432 436 439 447 447
EBITDA 249 3184 337 468 795 795

London Bridge Hospital uses the indirect method of the Cash Flow Statement because it begins with the information of the net income, which is the heading is the difference if the cash flows are Direct and Indirect; hence the financing activities and debts are equal in the presentation.

The differences that are created between Net Income and the cash generated from the activities are mainly stated as the Net Income of the hospital. The activities show us the increase and the changes in the inventories and the changes in the payable and receivables account, and the cash that is received by the customers or clients. The majority items that appear in the cash flow statement appear under the investments subcategory. The majority of allocations are towards capital expenditures and acquiring investments. This greatly influences the investing pattern for London Bridge Hospital. This means London Bridge Hospital is using the majority of their cash to purchase investments for future returns. The hospital also shows the payment of dividends so the hospital is not retaining all of their cash but a significant amount.

It is an objective of every organization to realize and maintain a positive cash balance. London Bridge Hospital has been able to maintain a positive cash balance, thereby indicating that it is able to meet both long-term and short-term obligations. Also, the hospital has remained solvent despite honoring covenants and agreements with suppliers, lenders and creditors. For the year ended 31st December 2018, the firm reported a positive cash flow margin 0f 15%. The cash balance is sufficient to meet the short-term financial obligations, thereby preventing crisis such as employee turnover.

Looking at the hospital’s financial structure, one can easily a shrinking cash flow. Also, the hospital’s expenses do not match the expected revenue generation. By continuing the operations in this hospital, there is a likelihood that its assets will be disposed below their market value in order to svelte its debts. Another burden that the hospital is currently facing is the income tax. Given the fact that the hospital does not have a good cash flow, the income tax has a huge negative impact on the revenues. The hospital should be wounded up in order to avoid further payments of corporate taxes. The current value of assets will be adequate for settling the outstanding debts.

The hospital should continue operating. Considering the good financial performance of the hospital ranging from the positive gross profit margins, return on equity and net profit margins for the year 2018 and the positive cash flow margin generated by the hospital for the year, the hospital can grow and expand significantly if it continues its operations. The issue of management problems can be fixed by recruiting a business knowledgeable personnel to run the hospital.

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