A financial ratio analysis of for-profit and non-profit rural referral centers

Michael J. McCue, Preethy Nayar

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

Context: National financial data show that rural referral center (RRC) hospitals have performed well financially. RRC hospitals' median cash flow margin ratio was 10.04% in 2002 and grew to 11.04% in 2004. Purpose: The aim of this study is to compare the ratio analysis of key operational and financial performance measures of for-profit RRCs to those of private, non-profit RRCs. Methods: To control for accounting aberrations within a given year, we selected RRCs that reported 3 consecutive fiscal years of Centers for Medicare and Medicaid Services (CMS) cost report data, starting with fiscal year 2004 and ending with fiscal year 2006. Given a limited sample size of 28 for-profit RRCs and 127 non-profits, we used the non-parametric median test to assess median differences in operational and key financial measures between the 2 groups. Findings: For-profit RRCs treated less complex cases and reported fewer discharges per bed and fewer occupied beds than did non-profits. However, for-profit RRCs staffed their beds with fewer full-time-equivalent (FTE) personnel and served a higher proportion of Medicaid patients. For-profit RRCs generated operating cash flow margins in excess of 19%, compared to only 8.1% for non-profits, and maintained newer plant and equipment. Conclusion: For-profit RRCs generated a substantially higher cash flow margin by controlling their operating costs.

Original languageEnglish (US)
Pages (from-to)314-319
Number of pages6
JournalJournal of Rural Health
Volume25
Issue number3
DOIs
StatePublished - Jun 1 2009

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Referral and Consultation
Costs and Cost Analysis
Centers for Medicare and Medicaid Services (U.S.)
Medicaid
Sample Size
Equipment and Supplies

ASJC Scopus subject areas

  • Public Health, Environmental and Occupational Health

Cite this

A financial ratio analysis of for-profit and non-profit rural referral centers. / McCue, Michael J.; Nayar, Preethy.

In: Journal of Rural Health, Vol. 25, No. 3, 01.06.2009, p. 314-319.

Research output: Contribution to journalArticle

McCue, Michael J. ; Nayar, Preethy. / A financial ratio analysis of for-profit and non-profit rural referral centers. In: Journal of Rural Health. 2009 ; Vol. 25, No. 3. pp. 314-319.
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