Riverview Community Hospital
Riverview Community Hospital is a 210-bed, not-for-profit, acute care hospital with long standing reputation for providing quality healthcare services. It has recently passed the highest Joint Commission accreditation. The hospital competes with three other hospitals in Metropolitan Statistical Area (MSA)- two not-for-profit and one for-profit.
Riverview generates its hospital’s net patient service revenue from patients who are covered by Medicare, Medicaid or other government programs or from various private plans. Net patient revenue seemed to be increasing from $25,661M in 2005 to $34,582M in 2009. Operating expenses of hospital included both inpatient and ...view middle of the document...
Overall the management must take action on decreasing financial trends. Net cash from operations has reduced to half from$7,192M in 2006 to $3,481M in 2009. The occupancy rate of Riverside in 2009 is 52.2% which is high than industry average of 45.4% and hence it is using fixed assets more productively than average hospital.
To influence profit margin, Riverside must increase revenues or reduce costs. It is recommended that marketing staff study the effects of raising charges or lowering them to increase volume; moving into new service or markets with higher margins and so on while management staff studies the expense items and can seek ways to reduce costs. Riverside’s analyst should investigate ways of reducing investments in various types of assets regarding total asset turnover. Finally, the hospital’s financial staff should analyze the effects of alternative financing strategies on equity multiplier, seeking to hold down interest expenses and the risks of debt while still using debt to leverage up ROE. It is better to decrease or stabilize net cash flow from operations. Economic Value Added (EVA) focuses on managerial effectiveness in given year of Riverside. It maintained the negative trend of not earning opportunity cost of assets from capital. The operating efficiency must be maintained to manage EVA. It is also recommended to continue monitoring KPI dashboards for organization’s mission success.
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