1. Riverview Community Hospital
HCA 341
Professor Sinay
Christine Yap
Derek Seron
Kristine Nguyen

2. Objectives Describe historical background of Riverview
Explain the underlying issues and problems at Riverview
Depict Statement of Cash Flows
Discuss Riverview’s financial position, strengths, and weaknesses
Interpret Operating Analysis
Discuss potential solutions
Expected results of solutions

3. Background 210 bed, not-for-profit, acute care hospital
Riverview competes with three other hospitals in the metropolitan statistical area (MSA)
Certified by the Joint Commission
Riverview Community Hospital recently received a full accreditation from the Joint Commission
In recent years, Riverview has expanded the hospital’s outpatient services
2 not for profits and 1 for profit hospital
Reputation for providing quality healthcare services to a growing area

4. Underlying Issues
A large for-profit chain purchased the only for-profit hospital that competes against Riverview in the metropolitan statistical area. The chain has a reputation for aggressively increasing market shares in the markets they serve
Riverview must now be able to compete in this new market environment.

5. Riverview’s Statement of Cash Flows
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities

6. Cash Flows from Operating Activities

7. Cash Flows from Investing & Financing Activities

8. Riverview’s Financial Position

9. Financial Analysis Riverview Industry Profitability Liquidity
Total Margin: 6.75%
Liquidity
Current Ratio: 2.67
Days Cash on Hand: $32.72
Debt Management
Debt Ratio: 40.9%
Asset Management
Total Asset Turnover: 0.67
Profitability
Total Margin: 3.48%
Liquidity
Current Ratio: 1.99
Days Cash on Hand: $15.89
Debt Management
Debt Ratio: 48.4%
Asset Management
Total Asset Turnover: 0.89

10. Operating Analysis Riverview Industry Profit Indicators
Profit per inpatient discharge: $79.61
Net Price Indicators
Net price per visit: $248
Volume Indicators
Occupancy rate: 61.66%
Intensity of Service Indicators
Case Mix Index:
Efficiency Indicators
Outpatient labor hours/visit: 9.24
Unit Cost Indicators
Salary per FTE: $22,596
Profit Indicators
Profit per inpatient discharge: $21.30
Net Price Indicators
Net price per visit: $139
Volume Indicators
Occupancy rate: 58.10%
Intensity of Service Indicators
Case Mix Index:
Efficiency Indicators
Outpatient labor hours/visit: 5.84
Unit Cost Indicators
Salary per FTE: $22,517

11. Summary Strengths Weaknesses
Long standing reputation for providing quality health care services
Offers a wide range of outpatient services
High patient satisfaction scores
Accredited by the Joint Commission
Competition
Payer mix; heavily relies on governmental programs
Decrease in the volume of inpatients
Outpatient services have not been very profitable

12. Summary
Riverview Community Hospital is more profitable and liquid than the industry average, however, both ratios have been on a decline since 2005
In comparison with the industry average, the debt ratio illustrates that Riverview uses less debt than the average hospital which is confirmed by the Du Pont Analysis
According to the total asset turnover ratio, Riverview has underutilized their assets to generate revenue as they have repeatedly shown numbers lower than the industry average.
This may be a result of Riverview being the smallest hospital within the region and growing competition

13. Recommendations & Solutions
Capitalize on strengths and work to improve weak points
Lower outpatient labor hours and visits by reducing excessive staffing and implement better employee utilization, as a result it would decrease operating costs
Balance the focus between inpatient and outpatient services, because it is believed that the recent expansion of outpatient services has been the cause of the decline in profitability. Shifting more focus back onto the inpatient services could better utilize Riverview’s assets and increase profitability to be able to compete with the new for-profit hospital.

14. Recommendations & Solutions
To increase revenue, it would be suggested to increase inpatient volume, however another riskier option would be to increase prices. Due to the competition within the market, Riverview may be a price taker which would not be a option
Restructure the billing department and incentivize quicker payments from patients/payers thus Riverview can have more cash on hand

15. Reference Gapenski, L., & Pink, G. (2010). Riverview
Community Hospital. Cases in Healthcare Finance (pp. 3-13).
New York: Health Administration Press.

16. Questions?