Q: We deal with a number of smaller hospitals. How would we find applicable thresholds for the ratios discussed today?
A: All the ratios we used today came from the hospital financial statements and footnotes. Such information is generally available regardless of hospital size.
There are a few of key considerations. An estimate of uncompensated care is critical since it generally relates directly to operating profit and cash flow. Uncompensated care is linked closely to hospital location, payer mix, and Medicaid coverage.
At the end of the day, less uncompensated care is good and vice versa. So track the movement in uncompensated care over time, and it should be a good indicator of existing and prospective hospital performance.
In addition to analyzing a three year trend in hospital financial ratios, there are numerous sites on the internet which provide healthcare industry averages for hospital financial information.
Course overview: Assessing Hospital Financial Performance