Another Way to Gauge Your Hospital’s Financial Health

Beckers recently published an article on how to gauge your hospital’s financial health, and they make excellent points. You can read the full article here. They cover many of the basics, including Aggregate Volume, Operating Ratios, Labor Costs Relative to Patient Volume, and Liquidity Ratios, but we believe there is another measurement that can shed light on your facility’s health and financial stability – Equivalent Discharges.

Equivalent Discharges is an alternative to Adjusted Patient Discharges as a measurement of patient load and resulting revenue.

Virtually every hospital finance executive knows that relative pricing methodology can influence Adjusted Discharges or Adjusted Patient Days. Increases in Relative Outpatient Prices will artificially increase Adjusted Discharges, while decreases in Relative Outpatient Prices will artificially decrease Adjusted Discharges.

In addition, modifying an Adjusted Discharge value by the inpatient case mix makes little sense because the complexity of an organization’s outpatient case mix does not always correlate with that of its inpatient case mix.

Equivalent Discharges is expressed as follows: Equivalent Discharges = Case Mix Adjusted Discharges + Conversion Factor X Case Mix Adjusted Visits

Hospital financial health can’t be measured by one metric alone, and ideally, we use many metrics and frequent checkups and reassessments. One of these can be Equivalent Discharge.

To learn more about Equivalent Discharges, and how we can use them to measure your hospital’s financial health, you can read our white paper here. Or give us a call at 888.779.5663 or contact us here.