Question

The first aspect of evaluating performance is to understand the current situation of the organization and to be able to compare that to the planned or desired state.

Explain the financial performance aspects in a healthcare organization.

Answer 1

Financial Performance:

Financial performance is subjective measure of how well a firm can use assets from its primary mode of business and generate revenues. This term is also used as a general measure of a firm's overall financial health over a given period of time.

Financial Performance aspects or Indicators of Healthcare Organisation.

• Profitability Indicator: This indicators Measures the ability to generate the financial return required to replace assets, meet increases service demands and compensate investors.

----- Total margin, cashflow margin, return on Equity, operating margin.

• Liquidity Indicator: This measure the ability to meet cash obligations in a timely manner

----- Current Ratio, Days cash on hand, net days revenue in account receivables.

• Capital Structure Indicator: This measurs the extent of debt and equity financing

----- Equity financing, debt service coverage, long term debt to capitalization.

• Revenue Indicators: This measurs the amount and mix of different sources of revenue

----- Outpatient revenues to total revenues, patients deductions, medicare inpatient payer mix, hospital medicare, outpatient payer mix, hospital medicare outpatient cost to charge, medicare acute inpatient cost per day.

• Cost Indicators: This measurs the amount and mix of different types of costs.

----- Salaries to net patient revenues, average age of plant, FTE's per adjusted occupied bed, average salary per FTE

• Utilization Indicators: This measures the extent to which fixed assets are fully utilized.

----- Average daily census swing-SNF beds, Average daily census acute beds

Conclusion:

Higher Indicator values are not always good. Most indicators have a middle range of "Good" values and etreme are "Bad" values