01.08.2022 - 15:12

Profitability analysis : Compare the profitability ratios for Glen Hall Hospital with its industry benchmarks. During this time period, Glen Hall has increased its patient volume, negotiated higher ra

Question:

Profitability analysis : Compare the profitability ratios for Glen Hall Hospital with its industry benchmarks.

During this time period, Glen Hall has increased its patient volume, negotiated higher rates for its managed care contracts, and lowered its labor expenses by outsourcing several support services (see Exhibit 4-17)

Exhibit 4-17 Selected ratios for Glen Hall Hospital and the industry benchmarks

Revenue, Expense, and Profitability Ratios Industry Benchmark Glen Hall Hospital
Operating revenue per adjusted discharge $4,900 $5,250
Operating expense per adjusted discharge $4,833 $4,300
Salary and benefits as a percentage of total operating expense 50% 45%
Operating margin 0.02 0.06
Return on assets 0.03 0.09
Non-operating revenue ratio 0.04 0.15
Answers (1)
  • Zella
    April 16, 2023 в 04:03
    Based on Exhibit 4-17, Glen Hall Hospital has higher operating revenue per adjusted discharge, and lower operating expense per adjusted discharge than the industry benchmark. Additionally, its salary and benefits as a percentage of total operating expense is lower than the industry benchmark. These factors contributed to Glen Hall Hospital's higher operating margin and return on assets compared to the industry benchmark. The non-operating revenue ratio for Glen Hall Hospital is also higher, which further improves its profitability. Overall, the profitability analysis indicates that Glen Hall Hospital is performing better than the industry benchmark.
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