Creekside Community Hospital Financial Analysis

    210-bed Not-for-Profit Acute Care Hospital
    Three other hospitals in Metro area
2 Not-for-Profit
1 For-Profit
    Joint Commission Accreditation
Passed with “Flying Colors”
Highest of six accreditation categories
    Long-Standing Reputation
Provide quality healthcare services
Ranked highest in patient satisfaction polls
Recent Years
Large for-profit chain reputation
Financial Strengths and Weaknesses:

Profitability Ratio:  Return on Assets - Measures how productive Creekside is using its assets.  At 4.53%, Creekside is more productive than 50% of the industry.

Liquidity Ratio:  Days Cash on Hand - Determining a hospital’s cash on hand is an important measure of whether they will be able to meets its payments when they become due.  Creekside Community Hospital has 32 days of cash on hand which in the upper 25% of the industry.

Debt Management Ratios:

    Debt Ratio – Measures what percent of assets are financed by debt.  Creekside’s debt ratio is 40.90% which is better than 50% of the industry.  Each dollar of assets was financed with 41 cents of debt.

    Cash Flow Coverage – Measures the amount by which cash flow covers the fixed financial requirements.  They are doing better than 50% of the industry with 3.95, but have declined over the 5 years.

Asset Management Ratio: Total Asset Turnover Ratio – Measures the turnover of all business assets.  Creeksides assets generated 67 cents in total revenue and it has increased from last year but they are still below the lower 25% of the industry.

Profit Indicators:

    Profit per Inpatient Discharge – Measures the amount of profit received from each inpatient discharge.  Creekside makes $79.61 per discharge which is greater than 50% of the industry.  However, Creekside is in a negative trend.

    Profit per Outpatient Visit – Measures the amount of profit received from each outpatient visit. Creekside has a loss of $1.60 per visit which is below the industry median of 66 cents profit.  However, the trend is has been a steady decline in losses and Creekside should be profitable in FY2006.

Net Price Indicators: Net Price per Visit – Measures the average revenue collected on each outpatient visit.  Creekside collected $248 per visit which exceeds the upper 75% for the industry.  Creekside has increased the net price per visit every year.

Volume Indicators: Average Daily Census – Measures the average number of inpatient beds occupied.  Creekside has trended downward over the past five years and for FY2005 was below the lower 25% for the industry.

Intensity of Service Indicators: Cost per Visit- Measures the dollar amount of resources, on average, expended on each outpatient visit.  Creek’s cost per visit is $250 has trended up and exceeds the industry upper quartile of $202.23.  Currently cost per visit exceeds net price per visit, which means Creekside either has too great of an expense associated with the visit or we need to charge more per visit.

Efficiency Indicator: Outpt Manhours per Visit – Measures the productivity of labor devoted to outpatient services.  Creekside spends 9.24 manhours per visit which exceeds the upper quartile for the industry.  This could indicate excessive staffing or underutilization of personnel.

Economic Value Added (EVA) performance:  The EVA represents the residual income that remains after all costs, including the opportunity cost of the employed equity capital, have been recognized.  Creekside’s EVA is ($1.2).  The bottom line is that Creekside is not profitable at this time.


Green = exceeds 75% of peers

Amber = lies between 50% - 75% of peers

Red = less than 25% of peers

Summary of Creekside Community Hospital's Financial Condition:
Creekside’s overall financial condition is sound but there are areas for improvement.  The hospital is profitable overall but is trending downward.  Based on the ratio analysis, expenses need to be better controlled, assets need to be managed more effectively, debt needs to be better utilized (using more), and fixed assets need to be managed better than current assets.  Based on operating indicators, inpatient profits are decreasing and outpatient profits are increasing, although they are still at a loss.  Management should consider charging more for inpatient stays and increasing the number of inpatients.  Management needs to consider changing operations in outpatient services.

1.       Increase inpatient services

2.       Lower outpatient operating costs

3.       See more patients per day to bring up efficiency