Introduction

River Community Hospital is a 210 -bed, not for profit acute care hospital.
The hospital competes with three other hospitals in the area, two are nonprofit and one for profit. River Community Hospital is the smallest of the
four but stands as the highest rank in patient satisfaction. It recently
passed the latest Joint Commission survey. Aside from the positive aspects
of the hospital, there are concerns about increasing market shares among
the hospitals because recently a large for profit firm known for
aggressively increasing market shares, purchased the only profit hospital
in the area.
1. Between 2012 and 2013, the hospitals net cash flow from operations
increased from $3.302 to $3.357 million an increase of only 1.7%. On their
investment in plants and equipment, they spend on average $6.007 million
per year. In 2011 the hospital had $35.966 million in net plant and
equipment, making this investment an increase of 33.4%. The hospital under
the financing activities increased its use of long-term debt on net cash flow
from financing by $3.477 million from 2012 to 2013. The ending cash reveal a
decrease in the cash balance from 2012 to 2013 in the amount of $2.274
million.

2. The hospital is nonprofit which nonprofits can receive tax deductions.

The hospital offers a pension plan

Accredited by The Joint Commission

Expanded the hospital's outpatient services 5 years ago

Inpatient cost is better than
3. 1. Negative trend in liquidity, both the current ratio and days cash
on hand have decline in the past two years.
2. Declining inpatient profitability, (profit per inpatient discharge for
the past two years.)
3.Negative trend in efficiency indicators,
4. Declining inpatient volume,
5.Negative trend in expenses

4. A) With the vacant land sold and the total assets decreased by 2 million. The
new RETURN ON EQUITY would be 7.96% an increase of .29% over the actual
2013 RETURN ON EQUITY.
B) With the debt increasing to 48% the new RETURN ON EQUITY is 8.71% an
increase of 1.05% over the actual 2013 RETURN ON EQUITY.
C) The new RETURN ON EQUITY is 9.22%.
D) A total margin of 8.81% would be needed to achieve the 10% RETURN ON
EQUITY.

*Jennifer will now answer questions 5-9