Business Case Studies & Business Publications

Cavalier Hospital

Schill, Michael J....

Case

Cavalier Hospital

Schill, Michael J.; Yount, Kenan

F-1696 | Published June 11, 2013 | 14 pages Case

Collection: Darden School of Business

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A midsize community hospital must choose a strategy to compete with an expanding regional rival. The strategy, focused on acquiring patient volume, includes expanding investment into integrated care, setting the reimbursement structure for revenue collection, and moving to a capitation-based payment system. The case presents an evaluation of revenue models to select that which best supports a given business strategy. This case is designed to introduce a health care audience to financial analysis. It provides a straightforward introduction to hospital financial-statement ratio analysis and hospital operating statistics, so it can also serve to introduce any audience with a business or medical background to hospital finance.

• Motivate the concept of the financial health of an organization, including the various systems associated with it (e.g., revenue generation, receivables collection, operations) • Build an ability to interpret financial ratios, including comparisons over time, across comparable organizations, and with capital market rates • Introduce students to the DuPont decomposition approach to organizing financial analysis • Develop ability to use financial analysis to identify organization concerns and develop strategies for improvement