MBAFP6273 Cigna Corporation and Anthem Incorporation Comparison Paper See attached paper and areas of revision original paper instructions: Write a 10

MBAFP6273 Cigna Corporation and Anthem Incorporation Comparison Paper See attached paper and areas of revision

original paper instructions:

Write a 10-page critical evaluation and comparison of two publicly-traded companies in the same health care segment. You may choose the two companies you wish to analyze. Apply the financial concepts and practices covered in this course to analyze the past and current financial situations, with an emphasis on financial strategies, financial analyses, and financial risks. Conclude with recommendations for future financial improvement. Your findings, conclusions, and recommendations must be grounded in the topics covered in this course.

Include a title page and table of contents in your paper, as well as the references list.

ADDITIONAL REQUIREMENTS
Written communication: Written communication should be free of errors that detract from the overall message.
APA formatting: References and citations should be formatted according to APA (6th edition) style and formatting.
Resources: A minimum of 5 references, all cited in the body of the text.
Paper length: A minimum of 10 pages, excluding a title page, table of contents, tables, figures, and the references list.
Font and font size: Times New Roman, 12-point. Running head: HEALTHCARE FINANCE
Healthcare Finance
MBA-FP6273
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HEALTHCARE FINANCE
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Contents
Opportunities Represented by Legislative Mandates ………………………………………………………………….3
Internal Factors Affecting CIGNA and Anthem Companies ……………………………………………………………4
External Factors affecting CIGNA and Anthem Companies……………………………………………………………5
Internal and External Factors Affecting Internal Control and Decision Making ………………………………….6
Impact of Outside Funders on Health Organizations …………………………………………………………………..7
Opportunities Presented by Internal Operational Structure………………………………………………………….8
Strategic Options in Valuing Projects and Budgets …………………………………………………………………… 10
Developing Structures and Capital for Long-Term Financial Viability ……………………………………………. 11
Strategic Alternatives in Planning For Funding and Expenses ……………………………………………………… 12
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Opportunities Represented by Legislative Mandates
Currently, there have been several legislative mandates that have been positively
impacting on the healthcare system in the United States of America. The impacts of the
legislated mandates have impacted on both CIGNA and anthem companies. Examples of such
government include the affordable care act, Health care and education reconciliation act of 2010,
and the patient protection act. These government programs have led health insurance to a
revolution in several ways. In other words, the impacts have been vast and wide. One of the main
effects of the landmark legislation is the upward trajectory of the deductibles, out-of-pocket
costs, and premiums (Dhillon, 2016). A report from Robert Wood Johnson Foundation was
released indicating that the costs of premiums were expected to rise as a result of those plans
being sold on exchanges. The exchange plan is a platform that has been functioning since 2014,
and it gives the consumers an online service where they can compare different health insurance
plans side-by-side to determine which company fits their needs.
The first legislative mandate that has acted as an opportunity for the health care insurance
companies is the comprehensive health care reform, which is also referred to as the affordable
care act. The law was enacted in the year 2010, and it was formed to various purposes. The three
main goals were to make sure many people were able to obtain affordable health insurance, to
improve methods of health care services, and to ensure all the adults earning low income were
covered by the Medicaid program.
Affordable care act has led to the establishment of the Accountable Care Organizations
(ACOs) and Medicare Shared Savings Programs. Generally, federal legislation, for example, the
prior meaningful apply requirements that have given rise to new reforms in the healthcare
industry which focuses more on the quality of the services over the quantity. The programs have
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resulted in the incorporation of new technologies such as data analytics and health records
analytics software. Also, healthcare organizations have benefited with the general strategies to
enhance service coordination and implement newly introduced plans of healthcare delivery.
These strategies have to save cost for the healthcare organizations in a great deal of amount.
ACOs are based on the thought that care coordination between primary care doctors, specialists,
health payers, and the hospitals to improve the quality and prevents patients from going through
communication gaps together with the care continuum.
The government programs have resulted in the increased revenue in the healthcare
programs to both CIGNA and the Anthem companies. The reason behind this increase in revenue
is because there has been an increase in the number of people taking up the cover due to the
availability of the subsidies from the government. This situation has positively impacted the
healthcare organizations in achieving and maintaining financial stability.
Internal Factors Affecting CIGNA and Anthem Companies
One of the internal factors that affect CIGNA Company is a strong distribution network.
In this case, the company has formed a reliable distribution network that can reach its potential
markets. The second factor is that the organization has an active dealer community where it has
established improved the relationship between the dealers and distributors. The dealers have
promoted the company’s products and have invested in training and mentoring the sales team on
how to persuade and convince a customer hence increasing the revenue. The awareness that has
been created by the dealers has assisted and relieved the distributors the burden of convincing the
customers. The third internal factor that is affecting the results and operation of CIGNA
Company is the strong brand portfolio (Vu, 2018). The strong brand portfolio has facilitated the
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company to expand into new categories of product. The company has also managed to
successfully track record of combining complimentary firms through mergers and acquisition.
The integration of technology firms as put the company in a position to align its activities or
activities and establish a supply chain that is reliable to its customers.
The first example of the internal factor that is affecting the operations and results of
Anthem is steady free cash flow. That is, the strong free cash flow has provided the company to
have enough resources to invest in new projects (Dhillon, 2016). The second internal factor that
impacts on the results and operations of the company is the excellent returns on capital
expenditure. Just like CIGNA Company, Anthem INC. has an active dealer community where
the company has also been able to acquire maximum benefits out of their products. Both
companies also share similar internal factors such as successful track record which facilitates in
developing new products through invitation and successful track record of bringing together
complimentary firms through acquisition and mergers.
External Factors affecting CIGNA and Anthem Companies
An example factor that has been affecting the operations of CIGNA Company is an
uptick of economy and customer spending increase after the years of recession and stagnant
growth rate in the industry. This is a benefit to the company since it is in a position to capture
more customers and increase its share of the market. The second external factor affecting
CIGNA is the new environmental policies (Vu, 2018). In this case, the new opportunities will
form a new level playing field for all participants in the market. This factor benefits the company
by heading home its advantage in new technology and obtain market share in the newly founded
product share. The government gives the third-factor rise through the green drive, which opens a
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chance for procurement of the company’s product by the federal and state government
contractors. The move by the company to reduce the amount of gases emitted in the environment
has impacted the governmental process plan of 2020 to minimize the amount of gases emitted by
the industries hence curb global warming.
One of the external factors that have been affecting Anthem Company is the decreasing
cost of transportation of the drilled oil. That is, the lower cost of shipping has enabled the
company to lower the price of its products hence acquiring the competitive advantage. The lower
price has resulted in high demand for the company’s products, thus recording high sales (Dhillon,
2016). The second external factor is the advancement in technology which the company is using
to differentiate pricing strategy in a newly founded market. The third factor is the opening up of
the new market since the government has agreed with other foreign countries for free trade hence
enabling the company to widen its market.
Internal and External Factors Affecting Internal Control and Decision
Making
The internal factors that are affecting the internal control in both CIGNA and Anthem
Company are common. First, the planning of finances of both companies is not efficiently and
adequately done. That is, the liquid asset ratios and the current asset ratio indicate the companies
can use the funds efficiently the real present situation (Balasubramanian et al., 2015). For
effective internal control, both ratios show the exact amount of funds that are used. Cigna
Company is experiencing a problem of high attrition rate in the workforce compared to other
companies. This situation has resulted in the company to heavily invest more in training and
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among other changes (Dafny, 2015). The unstable investment will challenge internal control
because it keeps on changing since it depends on the rival companies’ strategies.
One of the main factors that are affecting the internal control processes in both CIGNA
and Anthem Inc. is a different liability in various countries. In this case, the companies are
exposed to the different liability claims hence making the internal control difficult. This is
founded on the fact that there are changes in policies in these various markets, thus complicating
the decision making process complex. The second external factor affecting internal control of the
companies is growing strengths of the local distributors since the competition in some markets is
giving higher margins to the local distributors (Balasubramanian et al., 2015). This implies the
company has to pay different margins to these distributors. This results in different calculations
of the funds since the margins are different from one country to the other. The companies are
also faced by the problem of unstable supply of innovative products. This problem is mainly
given rise by the fact that that the development of products is based on the development by other
rival companies. Also, the supply of the new product in the market is irregular hence leading to
low and swings in the sales over some time.
Impact of Outside Funders on Health Organizations
In CIGNA company, outside funds can be explained well using the merging process with
the express script. The margin saw the company gaining about $60 billion, which was set to
transform the healthcare landscape. The transformation was focused on improving customers,
communities, partners, and clients’ satisfaction. The two organizations combined funds which
were used to create a blueprint for whole –person healthcare, which further enhanced their ability
to put their customers or clients at the center of their operations. This was made possible by
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creating an open, flexible, and connected model that enhances predictability, choice, and
affordability. Together with the merger, CIGNA has invested $200 million to improve the health
in the local communities in areas it serves (Singleton, 2019). Also, $25 million will be invested
to address the health of children, especially improving nutrition. These activities will benefit the
company by gaining a competitive advantage by enhancing its public relation with the
community. Therefore, the company will win many customers, which will finally result in high
sales.
Anthem merged with WellPoint in 2003 where the transaction raised about $16.5 billion.
The merging has enabled the company to raise more funds, which have been used to improve the
quality of its services to its client. The company has been able to adopt new technology since it
has more resources in the past (Kongstvedt, 2019). The company has also been in in a position to
invest in other projects, which have increased its revenue. The firm has also been able to provide
unique services and affordable products to its clients. The merging has also resulted in the two
organizations to obtain a significant market share in the United States of America. The
occurrence has led to an increase in both organizations shares in the stock market. Also, the
companies have reduced the costs that were spent on salaries and wages since the number of
employees is growing at a slower rate compared to an increase in output due to the application of
technology.
Opportunities Presented by Internal Operational Structure
The CIGNA company structure is broken down into several departments with a hierarchy
of authority in each category. The company’s internal structure enhances or promotes
transparency in all activities or the operations of the organization’s human resources. The clarity
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is in line with the company’s strategies that seek to improve the quality of services. Besides,
transparency also prevents the loss of revenue, which stimulates the growth of the firm. The
leaders of different departments in CIGNA company are visionary; hence, they can steer the firm
into achieving its objective of being a successful global company (Dafny, 2015). The use of
insightful policies enables the company to acquire a competitive edge over its competitors and
also enhances its growth plan. The company also concerns the employees through the provision
of insurance. The provision of insurance cover is mainly issued to the employees in the
multinational companies on short-term and long-term international activities.
Anthem Company pays much focus on strong corporate governance measures. The
management of the company ensures that they adhere to security laws and policies set by the
Security Exchange Commission and also the procedures established by the New York Stock
Exchange. The company is governed by the board of directors who are responsible for
overseeing and guiding the business operations. The core role of the board members is to further
the company’s long-term success and maintain a fiduciary role to the shareholders (Ko & Song,
2016). The board is also concerned with its business partners, the communities, associates, and
consumers. That is, the management ensures that all the individuals related to the business
operation and the product is satisfied. Besides, these groups of people are the primary
determinants of the success of the company. Hence, any failure in either of the group, the impact
will be spread across to all the constituents of the company. There has been able to form a strong
relationship with its shareholders, who are the primary source of the firm’s funds. Besides, the
management ensures it conducts a meeting with the shareholders to discuss the organization’s
strategic plans. Some of the issues that are discussed in the meeting include capital structure,
business results, and other vital topics regarding finance.
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Strategic Options in Valuing Projects and Budgets
Strategic budgeting is defined as the process of formulating a long-range budget that
spans a period the exceed one year. It is crucial for both CIGNA and the anthem company to
come up with a strategy that will ensure that it achieves its objective within the set time to avoid
delays in the projects. There are several steps that I would like to recommend the two
organizations to embrace in their valuing of project and budget process (Kerzner & Kerzner,
2017. The first step involves defining the direct labor cost. This step will depend on the scope of
the project. That is, organizations should identify whether the nature of the labor needed. The
idea will give the organization an overview of the labor costs. The second step will involve
estimating the material cost of the project. This step important since it can be used to determine
the number of the employees needed concerning the time set for the completion of the project.
The third step involves assessing the potential travel cost of the project. The action is
mainly applicable in these organizations since the companies carry out their operations in
different regions across the globe. It is crucial to note that such expenses should not be assumed
because they have a significant effect on the funds in the budget. The fourth step will involve
estimating the cost of the project office (Kerzner & Kerzner, 2017). This step includes the time,
additional material that may be needed and the salaries of the member of the project team. This
cost of the project office must be separated from the cost of buying the project management
software. This will enable the organization to focus on other costs in the projects without
considering the software concerns. An additional step will include defining the equipment costs
that may exist in the project budget. This action will depend on the nature of the project since
larger projects will incur additional equipment costs. The companies should also calculate the
administration cost that is predicted to be incurred. In this case, administrative staff away from
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the project management team should be included. The last step will involve determining the cost
of software needed in the project.
By adhering to these steps, the companies will reduce the possibility of creating an
inaccurate project. Also, testing or assessing each step will assist upper-level management in
determining if the project will need changes to meet the requirements.
Developing Structures and Capital for Long-Term Financial Viability
During the increased uncertainty in the economy, strategic capital planning is critical for
both CIGNA and anthem companies. Strategic capital planning enables the organizations to
determine the amount that the company requires to obtain its strategic objectives that were
planned on the performance of finance into the future of the business. The management of the
organizations should realize that finance is always changing and it is the primary determinant of
the company’s profitability. Several formative forces, such as the demographic changes, are
predictable (Pirozzi & Ferulano, 2016).
On the other hand, factors such as retroactive payments are abrupt. Others, for example,
new technologies are just upending assumptions. Strategic capital planning can be part of the
annual budgeting process; hence, it should not be costly and time-consuming.
One of the best capital planning strategies is the use of internal resources to develop a
convenient plan. Therefore, the parties involved in capital planning should have full awareness
of the company’s future finances. The planning team will give input on essential drivers of future
performance. Also, the members of the team should provide a reasonable assumption behind the
modeling output. The team should also assure the board of directors before the approval of
funding the strategy. Another strategy that should be applied in capital planning is the estimation
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of the intensiveness of the strategic capital plan (Pirozzi & Ferulano, 2016). The reason behind
this argument is because the intensiveness depends on the organization’s creditworthiness and the
nature of the capital project. Therefore, the strategy should encompass financial and market share
forecasts.
Another strategy would be to invest in consulting service or software to provide a plan
and model that is well detailed, establish an on-going process, free up internal resources, and
adequately prepare the company for documentation necessary in the financial process. This
strategy is most convenient in a situation where time and resources are pressed. The availability
of automated tools and templates enables companies to protect their finances. Also, some of
these automated tools can be interfaced with health records.
Strategic Alternatives in Planning For Funding and Expenses
The significant influencers of the costs of health care include inadequate…
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