1. By : Bianca Cole
ASSESSING HOSPITAL PERFORMANCE

2. WHO?
• Riverview Community Hospital is a 210-bed non-for profit
acute care hospital.
• It’s located in an area with three other hospitals: two non-
for-profits and one for profit.
• Riverview is the smallest of the four but has traditionally
been ranked highest in the patient satisfaction polls.

3. WHAT’S THE PROBLEM?
• A large for-profit chain has recently purchased the for-profit
hospital.
• That has caused some anxiety among the managers at the
other three hospitals.
• The large chain has a reputation for aggressively increasing
market share in the markets they serve.

4. WHAT’S MY TASK?
• I was brought on as a special assistant to the CEO.
• Melissa Randolph, CEO has assigned me the task of
conducting a financial statement and operating indicator
analysis.
Two Relevant Factors:
• In 2004, the board made the decision to significantly expand
the hospital’s outpatient services.
• Board members were complaining that too much time is
being spent at quarterly board meetings discussing the
hospital’s financial condition.

5. CASH FLOW OR NOT……
• My interpretation of the statements of cash flow from 2005-2009
even though there was an increase in the competition amongst
the hospitals, the Total Revenues(net patient services and other
revenues) continue to increase yearly.
• Net cash was increased due to the ability to get rid of the fixed
assets and long-term debts.
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed asset acquisitions (4.722)$ (6.402)$ (7.686)$ (4.328)$
CASH FLOWS FROM FINANCING ACTIVITIES
Long-term debt (0.184)$ (0.102)$ 3.549$ (1.427)$

6. OVERVIEW OF RIVERVIEW’S FINANCIAL
POSITION
• Total Margin Ratio is used as the primary measure of a hospital's profitability.
2005 2006 2007 2008 2009
Total margin 11.38% 11.28% 8.75% 6.48% 6.75%
Total asset turnover 0.68 0.66 0.66 0.61 0.67
ROA = TM x TATO 7.75% 7.43% 5.75% 3.97% 4.53%
Equity multiplier 1.82 1.73 1.66 1.79 1.69
ROE = ROA x Equity multiplier 14.10% 12.88% 9.54% 7.09% 7.66%
Check ROE (Excess/Funds) 14.10% 12.88% 9.54% 7.09% 7.66%

7. STRENGTHS AND WEAKNESSES
• Strengths: Even though, the hospital had a decline in the
total margin from 11.38%(08)-6.79%(09) we were above the
the industry average of 3.48% in Total Margin
• Current Ratio is currently at 2.67% above the industry
average at 1.99%.
• Financial Weakness: The Debt Management Ratio is below
average
• Asset Management Ratio is slightly below average at
60.59%; however the average collection period above the
normal rate.

8. FINANCIAL CONDITION
2005 2006 2007 2008 2009
ProfitIndicators:
Profitperinpatientdischarge $305.00 $301.98 $280.03 $126.72 $79.61
Profitperoutpatientvisit ($38.61) ($26.87) ($33.07) ($24.49) ($1.60)

9. MY OVERALL ANALYSIS
• Smallest Hospital with aggressive competitors.
• Increase Marketing of hospital services on a Local Level.
• Decrease Cost of operation for the Outpatient Clinic.
• Increase inpatient and outpatient services.