Executive Summary
Ramsey Healthcare’s facility is located in Australia and conducts operations globally. Increasing competition in the healthcare domain has made the company experience losses, and it requires to be changed by setting better strategies. It is important to note that the organization worked hard to embrace the United Nations’ sustainable development goals to attain sustainability.
The company’s financial analysis shows sustainability and hope for improvement because it shows a sign of development. Investor analysis and corporate social responsibility give the organization an upper hand in the competition. The company has a unique strategy for improving care and responsibility to offer better outcomes. As the company shows more passion for people, it leads to a better outcome in the discourse.
Introduction
Ramsey Health Care is a multinational corporation based in Australia and other parts of Europe. The company has experienced exponential growth in the healthcare domain on a global scale. However, the company experienced losses in the 2021 and 2022 financial years. This report analyses the financial situation and offers recommendations on how it can improve the financial ratios. Further, the report analyses the other financial decisions made by the company, which may lead to improved financial profitability in the long run.
Introduction to Health Care Industry
The global healthcare sector keeps rising to face new challenges, such as the COVID-19 pandemic, which ravaged it. Success in the healthcare sector requires input from key players such as hospitals, investors, pharmacists, and manufacturers working within the law to offer affordable and quality services. As new facilities emerge, the competition in the domain improves the patient’s experience. Many patient-centered approaches are applied to increase customer satisfaction and improve performance (Tenney and Kalenkoski, 2019).
When governments pledge to improve the quality of life for their citizens, the healthcare sector is the most crucial part. The key players who work together to ensure healthcare is delivered effectively include insurers, regulators, and pharmaceuticals, who work hand in hand to deliver quality services. The current healthcare industry is working towards offering sustainable services to the people by making the services affordable and closer to the people and addressing the most pertinent issues, such as communicable diseases (Deweerdt, 2022). It is imperative to note that the sector is concerned with six key issues: environmental factors, pandemics, equity, political factors, communicable diseases, and economic disparities.
Therefore, a successful healthcare venture must cover the six factors affecting people for sustainable healthcare delivery. New healthcare firms are being formulated by the day, marrying the healthcare sector with high competition. Some of the largest global healthcare players include Pfizer, CVS Health, and Johnson and Johnson, which strive to offer services with a more customer-centered approach. Uniformity is key as the World Health Organization offers the basic standard operating procedures that must be used to improve healthcare delivery in the discourse.
Ramsay Healthcare is one of the players in the healthcare domain with a global outlook, which has created its brand by improving the level of care improving customer satisfaction (Kludacz-Alessandri and Cygańska, 2021). The future trend that must be considered in the healthcare domain is telehealth, which involves using technology to deliver healthcare services to all parts of the world.
Introduction to Ramsay Health Care
Ramsey Healthcare is a locally owned company that operates globally and derives revenue from hospitals and other care facilities. The Australian multinational healthcare provider was founded by Ramsey Paul in Sydney and operates in Asia, Europe, the UK, and Australia (Tenney and Kalenkoski, 2019). The hospital specializes in psychiatric care, surgery, and rehabilitation services.
The company employs over 80,000 employees in the said countries and offers effective services due to the passion exhibited by the personnel (Heredia, 2019). The company has recently received awards as one of the companies working with the United Nations’ sustainable goals to reduce climate change and improve sustainability (Deweerdt, 2022). The company is the most profitable private healthcare service in Australia and aims to expand its operations to other parts of the world.
Primary Activities
Ramsey Healthcare provides a world-class mental healthcare network, psychology clinics, and day surgeries. The clinics further offer imaging and diagnostics centers where patients get diagnosed and treated. The healthcare organization intends to increase its global presence through investment in telehealth and diversifying operations to reach all parts of the world. The company’s prospects include reaching the world and becoming one of the most sustainable healthcare providers.
Recent Performances
The healthcare facility is considered to be among the most successful hospitals in Australia. It has registered improved care services in mental health. Ramsey Healthcare Facility was ranked the 4th most performing hospital in mental health (Heredia, 2019). The strategies set aside by Ramsey Health Care to beat the competition and thrive in the competitive corporate domain is to apply the 17 sustainable development goals by ensuring that care services are extended to society members in dire need. It plans to thrive in the highly competitive domain by increasing innovation, creativity, and climate-friendly approach (Kludacz-Alessandri and Cygańska, 2021). The most pertinent plans undertaken by the company are implemented through a three-pronged strategy: caring for the planet, caring for people, and caring for the communities.
Investment and Financing Decisions Made By Ramsay Health Care
The ongoing impacts of the COVID-19 pandemic affected the financial decisions taken by the company. However, one of the key financial decisions in the organization was the increase of motivation for employees to increase their morale. In the 2022 financial year, a total of 33.7 million pounds used in promoting flexible work arrangements significantly impacted employee performance (Deweerdt, 2022). The company further increases investment in digital technology to improve patient safety, and confidence is key in service delivery.
Notably, one of the facility’s most important financial and investment decisions in the 2022 financial year was the acquisition of Elysium in the United Kingdom and GHP specialty care to increase its operation base. The acquisition plays a major role because it is the prerequisite for expanding and offering higher-quality services. Plans are underway to seek integration and ensure that all the acquired businesses operate in tandem with the Ramsey values. The acquisition is an important investment decision because it helps the organization access increased market share (Kludacz-Alessandri and Cygańska, 2021). The two significant investments in employee motivation and acquisition laid the foundations for success in the organization.
Australian Stock Exchange Corporate Governance Council and Company Policies
The basic principles of corporate governance advocated for by the Australian Stock Exchange include risk management, responsibility, accountability, fairness, and transparency. The hospital leadership is dedicated to offering high-quality healthcare services and is guided by the company philosophy of people caring for people. Samples of the company policies include:
- All transactions shall be recorded for transparency and reproduced periodically or upon request.
- A risk analysis template must be completed before a new project is implemented in the healthcare sector.
- All employees must be treated with integrity and honesty and given a fair hearing in case of a discrepancy.
Ethics and Ethical Judgements
Ethical and progressive judgments at the healthcare facility are achieved when a company takes deliberate action to maintain higher levels of ethics in its operations. Ramsey Healthcare is guided by values taught to all employees during induction to ensure all actions and decisions are in tandem with ethical standards. The core values guiding the operations when dealing with an individual include integrity, respect, and credibility.
The code of conduct is a comprehensive document that guides how employees make their decisions when performing their day-to-day activities at the facility. All the people working for and on behalf of Ramsey Healthcare sign and use the document as the standard operating procedure.
Other than the code of conduct guiding the operations by the employees, the organization takes progressive action in continuous ethics and customer satisfaction training. The company complies with the United Nations’ sustainable development goals in its decisions and, therefore, makes judgments for the benefit of the people and the environment. All the new entrants into the company are induced on the ethical values while the ongoing employees are exposed to refresher courses to align their operations to ethics.
Corporate Social Responsibility
Corporate social responsibility (CSR) is a management concept where organizations and companies integrate society’s needs into their operations. While CSR may be considered as charity or giving back to the community, companies can use the concept for advertising and improving their brand. The importance of engaging in CSR is integrating all the stakeholders, which streamlines cooperation and improves relationships. Brand loyalty and revenue will likely increase when customers identify with the organization through their actions.
Ramsey Healthcare has a wide range of corporate social responsibilities that are set to benefit all stakeholders. One of the most common responsibilities is the reduction of carbon emissions in the world through its operations and training of people in society (Green, 2020). As the world battles climate change and higher carbon footprints, an organization trying to lower emissions gains customer support and, therefore, thrives in the discourse. The carbon emission reduction responsibility is aligned with the UN sustainable development goals.
The Ramsey Foundation in the UK works with the community to promote preventive healthcare to the population. The deployment of preventive care activities includes providing free screening services and enrolling the patients for progressing care. Free screening helps in the identification of diseases and offers early treatment. The free screening services are cascaded with adequate research to develop care centered toward organizational success.
It is imperative to note that the providence of free screening and treatment is strategic because it makes the patients identify with the hospital and seek their services when needed. Consequently, the hospital’s popularity increases in the regions where CSR is created. The company further extends the corporate social responsibility to its suppliers by ensuring that all the supply decisions are environmentally compliant.
Investors
An investor is a person or organization that funds a business to operate effectively in the corporate domain. The Paul Ramsey Foundation is the company’s largest investor, with an 18.8% share of the operating capital (Heredia, 2019). Perpetual investment takes the second position with 6% of the operating resources. State Street global advisors and Black Rock fund advisors take the third and fourth positions with 3.4% and 2.4%, respectively, in the investment (Green, 2020). The fifth investor in the company is the Vanguard group incorporation with a 1.93% shareholding (Green, 2020). The top five investors also serve as the top shareholders.
Ratio Analysis
Liquidity
Liquidity is the ability of a company to pay off its debts within the margin of safety without affecting its financial ability. Three ratios are used to determine a company’s liquidity: current ratio, operating cash flow ratio, and quick ratio. A positive current ratio in an organization is expected to be between 1 and 2. Ramsey healthcare’s current ratio is 0.88, meaning it does not have enough liquid resources to take care of all short-term liabilities. The business must, therefore, strive to ensure that the ratio is improved to a level between 1 and 3, which will mean that it has a high chance of making profits at all times.
The company must set strategies to increase the assets in the organization at all times while reducing liabilities. The operating cash flow is enough to take care of the challenges affecting the industry to conduct activities such as acquisition and proper remuneration for effective outcomes. The impact of the operating cash flow shows the ability of the company to tackle upcoming challenges in the organization. The change in working capital must be increased while lowering depreciation by improving maintenance services. A quick ratio of 2.54 shows that the company can settle its short-term liabilities in the long run. When a company can offset all its liabilities, it can expand and retain sustainability.
Non-Current Asset Management Efficiency
Ramsey Healthcare has a non-current asset management strategy that ensures efficiency and has all the required work done for the betterment of the organization in the long run. For example, the budget for depreciating assets makes it possible to work out their depreciation value and offer tangible outcomes in the discourse. When organizations can manage non-current assets to maintain sustainability, it is possible to make investments possible and obtain a better outcome in the long run (Green, 2020).
The balance sheet, income statement, and statement of accounts take care of future plans and strategies. Transparency in the financial accounts makes it easier to manage the outcomes in the organization. The efficiency of the company is 0.56, as shown in the calculations in the appendix. A higher efficiency ratio shows that the organization will likely improve its profit margins, especially when the expense is lowered while increasing the revenue.
Capital Structure
The capital structure combines debts and assets and how they are balanced to complete the work. The company relies on investors who work hand in hand with contributing resources. The combination of the capital makes it possible for Ramsey Healthcare to take care of the upcoming responsibilities and outcomes in the discourse (Batrancea, 2021). It is imperative to note that combining the different capital structures makes a company stronger and able to take care of its investment needs.
One of the important ratios used in the determination of capital structure is the debt ratio. The company has a debt ratio of 7:9 which means the company can borrow from other financial institutions to handle the upcoming organizational challenges. Some of the issues that can be handled by borrowing include but are not limited to hiring new staff, ensuring that the unit maintains acquisitions, and motivating them to perform better.
Profitability
Profitability ratios are financial metrics that are used to determine whether a business makes profits or not. It is the desire of all investors to have all their businesses make profits in the long run. Ramsey Healthcare calculates annual profitability ratios to ensure that all the decisions made in the organization are geared toward the positive outcome of profitability. One of the most important ratios used to determine a firm’s profitability is the return on investment, which determines how well a firm can take care of its upcoming challenges.
The lower ROA of 0.000099 means the company has over-invested its assets and failed to generate revenue. Therefore, it must ensure that all issues affecting the organization must be handled. For example, acquiring without having enough staff lowers profitability. The management must, therefore, change how it operates and focus more on the profitable activities in the organization.
Market Value
Market value is the price at which an organization can meet its obligation in the market niche and profit. Ramsey Healthcare has a positive shareholding in the organization and, therefore, works with different sectors of the economy to ensure that it has met its sole mandate in the discourse (Ramsay et al., 2019). Ramsey Healthcare has a market value of 15,426.512, which helps the organization reach out to numerous clients in the countries it operates, affecting most of its decisions.
The overall market value puts the healthcare facility in the right position in the industry to maintain its investment in the healthcare sector for better outcomes. The profit margins are likely to increase whenever an organization reaches the stated market value. Since Ramsey healthcare has a higher market value, it has a chance to improve its revenue because of the brand value it has created through its previous performance.
Overall Performance, Financial Status, and Cash Flow
Ramsey healthcare facilities have an overall performance of making losses in the first two years because of the COVID-19 pandemic that hit the world, and most healthcare facilities are still recovering. Its performance in debt repayment, market value, and latest acquisitions makes it possible for the company to profit. The organization’s financial status, such as liquidity ratio and return on investment, shows that the company can make profits and sustain sustainable growth (Batrancea, 2021). The cash flows and the liquidity ratio show that whenever the company needs to improve its performance, it can make work easier and improve its performance index in the discourse.
Suggestions to Improve Based on the Ratio Analysis
Ramsey healthcare ratios may be improved by implementing profit-oriented activities. The first option for improving the ratios is to ensure that it focuses on reducing the overhead expenses that do not add value to the day-to-day running of the organization. The organization must invest in research and development to ensure that it understands the customer needs and invests in them to customize the operations. When an organization customizes its operations to meet customer needs, it is likely to make more sales, increasing revenue in the long run.
Working Capital Management
Ramsey’s operating cash cycle is determined by key performance indicators such as revenue, net income growth, and equity and profitability ratios. The decline in profit shows that the working capital invested in the company has a negative outcome, and the revenue in the company is less than the investment done. The working capital is managed into acquisition, equipment, supplies, and employee motivation to increase their accountability and profitability in the end. It is imperative to note that all four key deliverables of the cash flow management at Ramsey Healthcare are handled with utmost efficiency and accountability (Green, 2020).
The inventories, accounts receivables, accounts payable, and cash are in the right proportions for effective management. When the liquidity is at the correct threshold, it eases the operations. Accountability in working capital management improves investor confidence, encouraging them to deliver better services. The declining profitability is accounted to the COVID-19 pandemic that ravaged the healthcare sector, but the company has strategies to make the organization profitable.
Although Ramsey Healthcare has experienced declining profits in the past three years, its financial decisions and operating cash management will likely reverse the trend by 2024 (Ramsay et al., 2019). Despite the financial losses, other aspects of cash flow management have improved in the company, such as increasing employee motivation and diversity, which is key to improving operations.
The company’s performance offers an opportunity for investors to increase profitability in the long run, making it possible for people to make profits. Ramsey healthcare’s compliance with the UN sustainable development goals helps it to appeal to customers and stakeholders who are pro-environment friendly (Batrancea, 2021). The steady flow in the account payables implies that the company’s market has a high growth potential.
Conclusion
Ramsey healthcare facility is a multinational healthcare facility based in Australia but operates in other parts of the world. The company focuses on offering patient centered care in the healthcare domain and works towards achieving a better health outcome. For example, whenever an organization makes a loss, it needs to strategize for a better outcome in the discourse. Although the company lost in the 2021 and 2022 financial years, the financial ratios show it can improve its operations. Its environmental sustainability makes it more reliable for a better outcome.
Reference List
Batrancea, L., (2021) ‘The influence of liquidity and solvency on performance within the healthcare industry: Evidence from publicly listed companies. Mathematics, 9(18), pp. 22-31. Web.
Deweerdt, T., (2022) ‘Why Is the Australian Health Sector So Far behind in Practising Climate-Related Disclosures?’. International Journal of Environmental Research and Public Health, 19(19), p.12822. Web.
Green, P., (2020) ‘Strong returns from health care, but valuations are stretched’. Equity, 34(1), pp.6-7. Web.
Heredia, D., (2019) ‘Comment: The changing PACE at Ramsay Health Care.’ Medicus, 59(7), p.12. Web.
Kludacz-Alessandri, M. and Cygańska, M., (2021) ‘Corporate social responsibility and financial performance among energy sector companies. Energies, 14(19), pp.60-68. Web.
Ramsay, N., Hossain, R., Moore, M., Milo, M. and Brown, A., (2019) ‘Health care while homeless: barriers, facilitators, and the lived experiences of homeless individuals accessing health care in a Canadian regional municipality’. Qualitative Health Research, 29(13), pp.1839-1849. Web.
Tenney, J.A. and Kalenkoski, C.M., (2019) ‘Financial ratios, and financial satisfaction: Exploring associations between objective and subjective measures of financial well-being among older Americans‘. Journal of Financial Counseling and Planning, 30(2), pp.231-243. Web.
Appendix: Financial Ratios Calculations
Current Ratio
Current Ratio = Current Assets / Current Liability
Current Ratio = 3,286.7 / 3,725.6
Current Ratio = 0.88
Operating cash flow (OCF)
OCF = Operating income + Depreceation – Taxes + Change in working capital
OCF = 9.0B + 0.314 – 0.442 + 0.271
OCF = 8.515
Quick ratio
Quick Ratio = (C + MS + AR) / CL
C represents cash and cash equivalents, MS for marketable securities, AR for accounts receivables, and CL for current liabilities.
Quick Ratio = (715.5 + 299 + 678.12) / 666.21
Quick Ratio = 2.54
Efficiency Ratio = Expenses / Revenue
Efficiency Ratio = 742.3 / 13044
Efficiency Ratio = 0.56
Debt Ratio = Total Debt / Total Asset
Debt Ratio = 7.36 / 9
Return on Investment = Net Income / Total Assets
Return on Investment = 236.5 / 2,470,000 = 0.00099
Market Value = Companies out standing shares × current market price
Market Value = 228.88 × 67.40 = 15,426.512.