Overview
The operational analysis of River Community facility is presented in this report, with an emphasis on key performance indicators (KPIs) that evaluate the efficacy and efficiency of the facility. The report analyzes areas of strength and potential improvement by examining Medicare payment percentage, average length of stay, occupancy rate, full-time equivalents per occupied bed, and expense per discharge. The results will offer practical suggestions for improving the hospital’s operating efficiency and conforming to standards set by the industry.
Medicare Payment Percentage:
This KPI measures the percentage of total discharges accounted for by Medicare patients.
Formula:
Medicare Payment Percentage=(Medicare Discharges/Total Discharges)×100
Data:
Medicare Discharges = 2,741
Total Discharges = 5,489
Calculation:
Medicare Payment Percentage=(2,741/5,489)×100=49.93%
Interpretation: Medicare patients represent 49.93% of total discharges, which is quite high. This suggests that a significant portion of the hospital’s revenue relies on Medicare payments. A reliance on government programs can lead to risks if policy changes reduce payments.
Average Length of Stay (ALOS):
This KPI shows how long patients, on average, remain in the hospital.
Data:
The average length of stay (ALOS) for River Community Hospital is already provided as 5.4 days.
Interpretation: The hospital’s ALOS of 5.4 days is slightly higher than the peer group median (5.36 days). While this is close to the benchmark, the hospital may want to explore ways to reduce ALOS without compromising care quality. Reducing ALOS can free up beds faster, improving turnover and reducing costs.
Occupancy Rate:
This KPI measures the proportion of available beds that are occupied over a period.
Formula:
Formula:
Occupancy Rate = (Patient Days / Staffed Beds×365)×100
Data:
Patient Days = 32,050
Staffed Beds = 178
Calculation:
Occupancy Rate=(32,050 / (178×365))×100=(32,050 / 64,970)×100=49.34%
Interpretation: The hospital’s occupancy rate is 49.34%, which is lower than the peer group median (65.9%). This suggests under-utilization of available resources. Increasing occupancy through better marketing or improving patient flow could help boost revenue and improve resource utilization.
Full-Time Equivalents (FTEs) per Occupied Bed:
This KPI measures staffing levels relative to occupied beds.
Formula:
FTEs per Occupied Bed=Full-Time Equivalents (FTEs) / Occupied Beds
To calculate the number of Occupied Beds, we can multiply the occupancy rate by the number of staffed beds:
Occupied Beds=Staffed Beds × Occupancy Rate= 178×0.4934=87.81 beds
Data:
Full-Time Equivalents (FTEs) = 619.3
Occupied Beds ≈ 87.81
Calculation:
FTEs per Occupied Bed=619.3 / 87.81≈7.05
Interpretation: The hospital has 7.05 FTEs per occupied bed, which is significantly higher than the peer group median (3.01). This indicates that the hospital may be overstaffed relative to patient load, and there could be opportunities to optimize staffing levels to improve efficiency.
Expense per Discharge:
This KPI measures the average cost per patient discharge.
Formula:
Expense per Discharge=Total Operating Expenses / Total Discharges
Data:
Total Operating Expenses = $163,792,000
Total Discharges = 5,489
Calculation:
Expense per Discharge=163,792,000 / 5,489 = 29,834.68
Interpretation: The hospital’s expense per discharge is $29,834.68, which is significantly higher than the peer group median of $15,126. This suggests that the hospital is spending more per patient discharge than its peers, which could point to inefficiencies in operations or higher-than-average operating costs. Cost-cutting measures or process improvements may be needed to bring this ratio in line with industry norms.
Summary of findings
The operational analysis of River Community Hospital highlights several key areas where the hospital’s performance can be assessed and improved, based on its operational key performance indicators (KPIs). These KPIs reveal both strengths and weaknesses in its current operations.
The Medicare Payment Percentage stands at 49.93%, which shows that nearly half of the hospital’s discharges come from Medicare patients. While this provides stable revenue due to the consistency of government payments, it also creates a risk due to the hospital’s reliance on Medicare. Any changes in Medicare policies could significantly impact the hospital’s financial stability. The hospital may want to diversify its patient base to mitigate this risk.
The Average Length of Stay (ALOS) is 5.4 days, slightly above the peer group median of 5.36 days. This minor variation raises no immediate concerns, but it does imply that patient flow could be improved and hospital stays could be shortened. Increased turnover from a more effective discharge procedure can open up more beds for patients and possibly enhance overall income without sacrificing patient care.
The computed Occupancy Rate is 49.34%, a substantial decrease from the median of 65.9% for the peer group. This suggests that the hospital is not making the most of its resources. Low occupancy rates may indicate problems with patient flow, hospital reputation, or patient intake. Better financial performance and resource use may result from higher occupancy. This might be increased with strategic marketing, patient service, and process optimization efforts.
The median for the peer group is 3.01, however the FTEs per Occupied Bed is 7.05, more than twice as high. This may indicate overstretching in comparison to patient volume, which would result in inefficient labor expenditures. Reviewing the staffing model could help the hospital cut expenses without sacrificing the quality of treatment by making sure it is optimum for the number of patients actually receiving care.
Finally, at $29,834.68, the Expense per Discharge is almost twice as much as the $15,126 peer group median. High running expenses per patient discharge are indicated by this, indicating inefficiencies in cost control. To get its expenses closer to industry norms, the hospital should look into particular areas of excessive spending and think about simplifying procedures.
Overall, even though the hospital does well in many areas, it can perform much better operationally and financially if major improvements are made in occupancy, personnel efficiency, and cost management.
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