Metrics

Question 1

Average length of stay (days)

Answer 1

=patient days ÷ total discharges
-The average stay counted by days of all or a class of inpatients discharged over a given period. Used as an indicator of efficiency in containing inpatient service costs.

Question 2

Maintained bed occupancy (%)

Answer 2

=(patient days x 100) ÷ (maintained beds x 365)

-A measure of the volume and utilization of inpatient services.

Question 3

Operating margin (%)

Answer 3

=(total operating revenue – total operating expenses) ÷ total operating revenue
-his profitability indicator shows the income derived from patient care operations. Profitability indicators measure the extent to which the organization is using its financial and physical assets to generate a profit

Question 4

Excess margin (%)

Answer 4

=(total operating revenue – total operating expenses
+ non-operating revenue) ÷
(total operating revenue + non-operating revenue)
-goes beyond the operating margin to include all sources of income and expenses. Other sources of income besides those from patient care operations have become increasingly important to hospitals.

Question 5

Debt service coverage ratio (x)

Answer 5

=net revenue available for debt service ÷
(principal payment + interest expense)
-measures the organization’s ability to meet its debt repayments. A declining ratio number can indicate that an organization is in danger of becoming insolvent.

Question 6

Current ratio (x)

Answer 6

=total current assets ÷ total current liabilities
-liquidity indicator shows the number of times short-term obligations can be met from short-term creditors. Because it provides an indication of the ability to pay liabilities, a high ratio number is one way short-term creditors evaluate their margin of safety.

Question 7

Cushion ratio (x)

Answer 7

= (cash and cash equivalents +
board designated funds for capital)
÷
estimated future peak debt service
-A measure of  the capital structure of the organization. This ratio is important in evaluating the financial risk position of an organization.

Question 8

Accounts receivable (days)

Answer 8

=(net patient accounts receivable x 365)
÷ net patient revenue
-A measure of the efficiency of the collections function

Question 9

Average payment period (days)

Answer 9

= (total current liabilities x 365)
÷
(total operating expenses – depreciation and amortization expenses)
-A measure of how efficiently an organization pays its bills.

Question 10

Average age of plant (years)

Answer 10

=accumulated depreciation ÷ depreciation expense
- Indicates the financial age of the fixed assets of the hospital. The older the average age, the greater the short term need for capital resources

Question 11

Days of Cash on hand

Answer 11

=(cash + marketable securities + unrestricted Assets) ÷ (cash operating expenses/365)
-an important measure of hospital liquidity. An organization needs a certain amount to meet the requirement of lenders, rating agencies and others. But if DCOH is too high, the impact on hospital finances could be detrimental, as cash is not deployed to areas of the business generating higher returns.