Cavalier Hospital

Cavalier Hospital is a nonprofit hospital providing high-quality and affordable healthcare. With the expansion of Hamilton Hospital, Cavalier Hospital is facing competition for patient traffic, encouraging Cavalier Hospital to search for new, innovative ways to generate more patients and revenue. The American Heart Association has indicated that cardiovascular care is growing increasingly expensive and crucial to the nation’s health. The trend towards greater obesity and the aging population of Virginia indicate a significant market opportunity for a new cardiovascular unit that will not only provide better holistic treatment for cardiovascular disease, but also potentially generate a competitive edge to Hamilton Hospital. As part of the board, Dr. William Harrison must evaluate the hospital’s financial condition and determine if the Rotunda model should be implemented to the entire hospital.

Cavalier Hospital’s financial position has deteriorated since 2007. The new Rotunda Center has generated greater inpatient traffic and an increase in $41.4 million in total revenue since 2008. The current ratio of 2.1 compared to the industry average of 2.0 indicates that the hospital is able to meet short-term financial obligations as a result of the sudden new influx of patients and cash on hand. Despite this, net income is decreasing. This is partially due to increasing expenses - the large amount of capital needed for initial investment of the new center. The 0.9 debt to equity ratio compared to the average industry ratio of 0.7 indicates the use of aggressive leverage to instigate growth. Their ROA has been significantly decreasing from 2007, suggesting that they are not efficiently utilizing their newly acquired assets.

Medically speaking, the Center’s quality of care has been well ahead of the national average. Their door-to-balloon time is 3 minutes lower than the national average, and they have also witnessed noticeably less PCI complications than their...