based on the benchmarks included in this question what is th

based on the benchmarks included in this question, what is the potential financial impact on the hospitals organizational strategy and potential implications on patient care. ratios included

65% 3:50 PM 185 Optum & CMS Median Ratio 200-299 300-399 Hospital Industry 1-99 Beds 100-199 Beds Beds 2 Average payment period, days Revenue, expense, and profitability ratios Operating revenue per adjusted discharge Operating expense per adjusted discharge Salary and benefit expense as a percentage 7,086 $6,494 Total asset turnover ratio Net fixed assets turnover ratio Long-term debt to net assets ratio Net assets to total assets ratio Times interest earned ratio Debt service coverage ratio EXHIBIT 4.16a FINANCIAL RATIOS FOR ALL U.S. HOSPITALS BY

Solution

Liquidity Ratios position based on industry\'s position

The Current ratio of the company is 1.42 and 2.1 in 2000 and 2001 respectively which is not above the required standard of 2.11 of Hospital industry. The Acid test ratio is 1.28 and 1.93 in 2000 and 2001 respectively which is above the standard of 0.30 of hospital industry. Days in Accounts receivable is 4 and 5 days in 2000 and 2001 respectively which is below the standard of 49 days as per the requirement. Similarly Average payment period is 6 and 5 days in 2000 and 2001 respectively which is also below the standard of 50 days as per the requirement.

Hence the Acid test ratio, Days in Accounts receivable, Average payment period meet the standard requirement of industry.

Capital Structure Ratios position based on industry\'s position

Long term debt to net asset is 0.35 and 0.34 in 2000 and 2001 respectively which is not below the standard ratio of 0.21 of hospital industry. Net asset to total asset is 0.56 and 0.61 in 2000 and 2001 respectively which is above the standard requirement of 0.54 of hospital industry.

Hence the ratio Net asset to total asset meets the standard and the ratio Long term debt to net asset do not meet the standard (or benchmark requirement).

Activity Ratios position based on industry\'s position

Total Asset turnover ratio is 1.32 and 1.25 in 2000 and 2001 respectively which is above the standard requirement of 1.07 of hospital industry as desired. Therefore this ratio meets the standard requirements. Fixed asset turnover ratio is 1.78 and 2.16 in 2000 and 2001 respectively and the standard ratio is 2.12 (i.e. ratio of the year 2000 do not meet the standards whereas the ratio of the the year 2001 meets the standards.)

Profitability Ratios position based on industry\'s position

Salary and benefit expenses as percentage of total expenses is 40.74% and 43.40% in 2000 and 2001 respectively which is not below the standard of 40% of the hospital industry and therefore do not meet the standard. Return on total asset in 2000 was -1.23% which is not above the industry requirement of 0.04 and hence do not meet the benchmark whereas return on total asset in 2001 was 4.56% which is above the industry requirement of 0.04 and hence meets the benchmark. The performance of Operating margin is also similar to Return on total assets as it meet the standard in 2001 (3.64% above than the standard of 0.03) but it do not meet the standard in 2000 (-0.93% is not above than the standard of 0.03).