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HCA 341: Riverview Community Hospital

(Assessing Hospital Performance)

Tina Nguyen

on 17 November 2014

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Transcript of HCA 341: Riverview Community Hospital

Interpretation of Statement of Cash Flows
Cash Flow from operating activities
Riverview Community Hospital
Assessing Hospital Performance
Riverview Hospital
We understand your time is valuable...
20 minute presentation analyzing financial position and ratios

Outpatient Services
Operating Activities
Average Annual Profit from 2005-2009 $577,400
Initial investments into infrastructure caused negative profits from 2005-2007
Recommendation: Continue push to increase outpatient services
$1,032,000 in profit in 2008
$2,725,500 in profit in 2009
Investing Activities
Riverview spent the most on fixed assets in 2008 and spent the least on fixed assets in 2009.
Cash Flow from Investing Activities
This section explains the effects of both the property and equipment (fixed assets) of Riverview. The values of these fixed assets are shown below from 2006-2009:

2006: $ (4.722)
2007: $ (6.402)
2008: $ (7.686)
2009: $ (4.328)
Riverview Community Hospital
Assessing Hospital Performance
Christina De Los Reyes
Michelle Tran
Tina Nguyen
210 bed
Acute care hospital
Competes with 3 other hospitals in the area
Accredited by the Joint Commission
Recently a for-profit hospital chain just purchased the only for-profit hospital in the area, now there is concern about the increasing market share.
Income from operations Net cash flow from operations (in millions):
2006: $3.214 $7.192
2007: $2.629 $5.378
2008: $2.102 $4.533
2009: $2.458 $3.481
From 2006 to 2009, the value of net cash flow from operations showed signs of decreasing each year. Therefore, it is good news because the amount of money spent on operating activities have been decreasing consistent, saving Riverview more money.
Cash Flows from Financing Activities
This section will focus on Riverview's use of securities to finance its operations and other business activities (ending cash and investment)
2006: $5.799

2007: $4.673
2008: $5.069
2009: $2.795
Financing Activities
In 2006 and 2008, Riverview had the highest amount of "ending cash and investments". This shows that the hospital was prepared to invest in real assets as opposed to financial assets during the year 2006 and 2008 as opposed to in 2007 and 2009.
Economic Value Added
EVA analysis
2005: $4.4

2006: $4.5

2007: $3.8

2008: $3.7

2009: $4.2
EVA measures the managerial performance of a company over a period of time. Riverview had the highest amount of EVA in 2006. This demonstrates that there was an increase in the flow of profit and Riverview's performance was great during 2006. Consequently, their lowest EVA value was during the year 2008.

Overview of Financial Position
Du Pont Analysis
Return on Equity (ROE) vs.
Industry Average

2005: 14.10 %
2006: 12.88 %
2007: 9.54 %
2008: 7.09 %
2009: 7.66 % vs.
6.01 %
Overall, Riverview Community Hospital higher ROE percentage in 2009 when compared with the industry's average. This means they are getting more money in their equity account for their shareholders during 2009.
Reimbursement negotiations
mention to insurance patient satisfaction stats & outcomes
Lower overhead costs
contracts with service providers can be negotiated
contracts with service providers can be negotiated
control inventory
Target community needs
keep experienced staff
increase patient satisfaction
& if needed, look for innovative self-motivated employees
Questions, Comments, Concerns?
but since 2006
Ratio Analysis
assets underutilized
net cash flow decreasing from 2006 to 2009 = GOOD!
providing more services
more efficient marketing (online & word of mouth referrals)
letting some administrative personnel go and/or combining responsibilities
reduction/more efficient use of facilities
Operating Activities
Investing Activities
2008 - GOOD!
new building & equipment will require less maintenance (save money in the long run)
2009 - less spent because they already invested a lot last year
Increase patient collections
managers should have set efficient policies & procedures)
decrease claim denials by coding for services correctly in the first place
managers should have properly trained personnel
Outpatient Services
Better profit margins than industry average = “better control over expenses”
Managerial reason: reducing unnecessary expenses
Low total asset turnover = “below average utilization of assets” compared with the industry
possibly due to increased fixed costs
Du Pont Analysis
managers must review financial statement to find out why

BUT still high ROE so GOOD JOB! :D
Operating Performance
Financial Performance
Full transcript