Week 3: Financial Reports and Analysis
Assignment: Financial Analysis
You are a consultant to Concord Hospital in New Hampshire. You have the financial reports along with some additional data that you are reviewing in order to provide some recommendations for the hospital moving forward. As part of your analysis, you will be comparing the performance of Concord Hospital to the median results as published by Becker’s Hospital Review (Becker’s CFO Report).
As part of your report, you are to complete the following:
- Calculate the following financial ratio calculations for 2019 and 2018: (4 points each)
- Current Ratio
- Days Receivable (DAR) [your text uses “net credit revenue” in the formula, but for purposes of this assignment use the following formula:
Net Patient Receivables ÷ (net patient service revenue divided by number of days in the period) ]
The Becker Report refers to this formula as “Accounts Receivable”.
- Days Cash on Hand
(subtract depreciation and amortization, Medicaid enhancement tax and interest expense from operating expenses to get cash operating expenses)
- Average Payment Period (or Payment Turnover):
current liabilities ÷ (total operating expenses/365)
- Operating Margin
- In addition you are to calculate the following:
- Net income(loss) per patient day for 2019 (Remember that the monetary figures are listed in thousands, but the patient days are actual) (4)
2019 Patient Information
Total Discharges: 17,930
Total Patient Days: 98,462
- Percentage of net patient revenue for 2019 for the following payors. (2 points each) The information for this question is found on the last page of the Concord Hospital report (page 4)
- Medicare and Medicaid (combined)
- Third party payors
- Self pay patients
- Once you have performed the calculations you are to comment on the findings. Include in your response the answers to the following (you are not limited to these, they are just to get you started): Please note that a one or two sentence response is not sufficient to answer the questions for full points. (100 points)
- Is there a downward or upward trend from one year to the next based on your calculations? Why did that happen?
- How do they compare to the industry overall?
- How does their payer mix compare to the national mix as provided in Week 2 supplemental materials (Nation’s Dollar: Where it Came From, Where it Went).
- Provide 3-4 recommendations that you will make for the administration of Concord Hospital moving forward. Make sure that those recommendations are realistic and viable and based on the data.
- Place your answers on the answer sheet provided with the assignment (see blackboard weekly materials week 3). Show your work for the calculations.