Metropolis Health System

Analysis of Metropolis Health System:

Metropolis health system and the sample hospital analysis is compared against national average. As noted in our text the analysis should be done against comparable hospitals and hospital systems. Since Metropolis is a mid-size taxing hospital, FITCH and Premier data will be more appropriate to compare against MHS. FITCH data is mainly based on non-profit hospitals and healthcare systems, Premier sample is mainly influenced by community hospitals. On the other hand sample hospital results are compared against Premier alone.

Average length of stay for MHS is 4.1 days compared to 4.35 days of Premier data using 650 community hospitals. This is a favorable number by 0.25 days. The indicator for containing inpatient service cost is equal or better than the national average. MHS had much better profitability indicator, operating margin, than both FITCH and premier covered hospitals by more than 2%. MHS’s excess margin was also much better compared to national average. Excess margin is an important indicator since this reflects all sources of income including income from patient care operations. Regarding MHS debt payments, debt service ratio is higher than national average by ~1%. The current ratio is much lower compared to national average since MHS had much higher current liabilities compared to its current assets. The amount of cash on hands is also very low for MHS. Accounts receivable days is higher compared to national average but the accounts average payment period is very close to national average. This means is MHS is having problem in collecting its money. Longer the time it takes to collect receivables, there is a better chance for default. The management should invest more resources and money to improve accounts receivable days. Because of these measures, cash on hands is very low for MHS. This is a solvency indicator that measures the number of days MHS could pay its entire operating expenses without collecting any...