1. +annual performance review
Munroe Regional Medical Center

2. Scope of Engagement
Cleverley and Associates was asked by the board of MRMC to
assess current performance in two primary areas:
~ Financial Performance
~ Cost Efficiency

3. Benchmark hospitals used in study
Peer One: Leesburg Regional Medical Center
Group One: Agency for Health Care Administration
~ Average of hospitals in Agency for Healthcare Administration Group Six
Group Two: Low Cost Florida Hospitals
~ Florida non-teaching acute-care hospitals
~ Between $185 million and $325 million annual net patient revenue
~ Case Mix Index between 1.45 and 1.85
~ Hospital Cost Index® less than 100.0

4. Data Sources in Report Audited Financial Statements
Medicare Cost Report
Medicare Inpatient Claims
Medicare Outpatient Claims
Munroe
2008
2007
2007 (and 2008 preliminary data)
Leesburg
n/a
AHCA
Low Cost

5. ® Financial Strength Index
examine your financial performance
compare your financial performance
+survey:
The FSI compares an organization’s performance to “targets” in four areas:
1. Profit (metric: Total Margin)
2. Liquidity (metric: Days Cash on Hand)
3. Debt (metric: Debt Financing %)
4. Plant Age (metric: Average Age of Plant)
A higher FSI score is desirable.
Financial
Strength Index
Measuring the ability to withstand short-term financial shock and capitalize on opportunities.

6. Total Margin (TM) +survey: Negative Trend
examine your financial performance
compare your financial performance
Negative
Trend
+survey:
Total Margin (TM)
* Munroe data is from audited financial statements. Peer data is from the Medicare Cost Report (Leesburg FYE is June 30).
† Receives tax support in excess of $5 million.

7. Days Cash on Hand (DCOH)
examine your financial performance
compare your financial performance
Negative
Trend
+survey:
Days Cash on Hand (DCOH)
*Munroe data is from audited financial statements. Peer data is from the Medicare Cost Report (Leesburg FYE is June 30).
†Peer values based upon filed Medicare Cost Reports (Worksheet G) and may be understated.

8. Debt Financing % +survey: Negative Trend
examine your financial performance
compare your financial performance
Negative
Trend
+survey:
Debt Financing %
*Munroe data is from audited financial statements. Peer data is from the Medicare Cost Report (Leesburg FYE is June 30).

9. Average Age of Plant (AAP)
examine your financial performance
compare your financial performance
Negative
Trend
+survey:
Average Age of Plant (AAP)
*Munroe data is from audited financial statements. Peer data is from the Medicare Cost Report (Leesburg FYE is June 30).

10. Required cash & investment position
determine cash balances
examine debt capacity issues
create net income targets
+design:
Required cash & investment position
Values stated thousands (000).
Investment Need
Desired Balance
Presently available funds
$ 109,230
Working capital
25,534
Capital asset
155,410
less Total required
$180,944
Surplus (Deficiency)
$(71,714)
Required Days Cash on Hand at “Desired Balance” level = 213
Present Days Cash on Hand = 128

11. Payer Mix - 2007 +expand: revenue enhancement
*Receives $5 million in tax support

12. Hospital Cost Index® Facility-level cost measure: Inpatient Cost Index
cost containment
+expand:
Hospital Cost Index®
Facility-level cost measure:
Hospital Cost Index®
Inpatient Cost Index
Formula:
Your Medicare Cost per Discharge (CMI/WI adj)
US Median Medicare Cost per Discharge (CMI/WI adj)
Outpatient Cost Index
Formula:
Your Medicare Cost per Visit (RW/WI adj)
US Median Medicare Cost per Visit (RW/WI adj)
A high index score indicates a higher relative cost position.

13. cost containment
+expand:
Hospital Cost Index®

14. cost containment
+expand:
Inpatient Cost Index – 2007

15. Outpatient Cost Index – 2007
cost containment
+expand:
Outpatient Cost Index – 2007

16. Executive Summary
The financial position at MRMC has been eroding in the last few years due primarily to declining margins.
Declines in margins are being driven by revenue factors especially major governmental payers.
MRMC has a very competitive cost structure placing it in the best quartile of both US and Florida hospitals.
Significant improvements in future margins will be required to maintain the financial viability of MRMC.