my finance project in the AUC

1. Project of finance under
supervision of :
Dr. khaled Bahaa El-Din
GROUP OF NEW
HANOVER REGIONAL
MEDICAL CENTER

3. General Overview of U.S Economics
ITEM % Change
( 2010 – 2011)
GDP
( Gross Domestic
Production)
1.7 %
Healthcare and social
assistance sector
2.6 %
1.7%
2.6%

4. •
• Address: 2131 S 17th St, Wilmington, NC 28401, United States
• Phone: +1 910-667-7000
• Web site : www.nhrmc.org/new-hanover-regional-medical-center

5. NHRMC in a glance
• New Hanover Regional Medical Center (“NHRMC”) is a public,
nonprofit corporation providing health care to residents of
southeastern North Carolina.
• NHRMC is a component unit of New Hanover County (“County”),
North Carolina for financial reporting purposes and is included in
the basic financial statements of the County together with its
component units.
• It performed 10,436 annual inpatient and 17,781 outpatient
surgeries. Its emergency room had 116,233 visits and have 855 beds.

6. NHRMC in a glance
• As required by accounting principles generally accepted in the
United States of America, these financial statements present
NHRMC and its component units.
• All dollars presented in these Notes to Financial Statements are in
thousands.

7. History
• On June 14, 1967, seven prematurely born infants arrived in
cardboard cradles as tiny ambassadors in perhaps the crowning civil
rights achievement in the history of Wilmington, N.C.
They were the first patients of the newly opened New Hanover
Memorial Hospital. During a turbulent period of civil rights in this
nation’s history, their arrival marked the merger, in a small city in
the Deep South, of a black and white hospital – without protest,
riot or bloodshed. For the first time, the county’s hospital treated
everyone, regardless of race, creed, national origin or ability to pay.

8. Accreditations
• Have many of accreditations such as:
• Joint Commission on the Accreditation of Healthcare Organizations
• Cardiac and Pulmonary Rehabilitation

9. Mission
• New Hanover Regional Medical Center is a team-centered,
value-focused, teaching provider of quality health care to all
in need of its services.

10. Vision
• To be the best provider of comprehensive health services
rendered with value, dignity, and respect.

11. Values
• As one of the largest employers and the leading provider of health care in
southeastern North Carolina, New Hanover Regional Medical Center
believes in the value of life. Our philosophy is to honor and celebrate life
through the care we deliver to patients and their families, the service we
provide to physicians, the environment we create for our employees and
volunteers, and the attitude we display to all. We embrace the following
values:
• Quality
• Dignity
• Loyalty
• Education
• Compassion
• Integrity
• Respect
• Efficiency

12. Balance Sheet
September 30, 2010September 30, 2011
156945
( 17.16%)
169289
( 17.84%)
Current Assets
757428
(82.83%)
779712
( 82.16%)
Fixed Assets
914373 (100%)949001 (100%)Total Assets
101277
( 23.59%)
110469
( 25.23%)
Current Liabilities
328084
( 76.41%)
327471
( 74.77%)
Long Term Liabilities
429361 (100%)437940 ( 100%)Total Liabilities
485012511061Owner Equity

13. Balance sheet

14. Income Statement September 30, 2010September 30, 2011
599018655690 ( 9.5%)Net Patient service revenue
1754218638Other revenue
618276674328 ( 9%)Total operating revenue
287103305257Salaries, wages, benefits
130269137964Medical supplies
2250340967 ( 82%)Professional fees
1090313287Insurance
87946100973Purchased services
4265243457Depreciation and
amortization
1716(5146)Non operating revenues
(551)(1228)Capital contributions from / to
component units
580211648279 ( 11.7%)Total expenses
3634926049 ( 28.3%)Net profit

15. Income statement

16. Income Statement
Tot. operating revenue Tot. expenses Net Profit
2011 6.74 6.48 2.6
2010 6.18 5.8 3.63
0
1
2
3
4
5
6
7
8

17. Comments
• Despite the growth of revenues ( app. 9%), the net profits has
declined sharply by app. 28%.
• This is due to the aggressive increase of total expenses ( 11.7%)
i.e. expenses raised more than revenues leading to net profit
decline.
• Salaries, wages, and benefits increase: 6%
• Professional fees increase : 82%
• All these items have set up to keep the organization salary
structure competitive in healthcare sector.

18. Cash Flow
20102011cash flow
8925971551from operating activities
21952261
from non capital financing
activities
-(76166)-(70694)
from capital financing
activities
5209-(8662)from investing activities
20497-(5544)net
81283101780at beging of year
10178096236at end of year
5.4%
19.8%
266%
7.1
%

19. Cash Flow
cash flow at end of year
2011 9.62
2010 10.17
5
5.5
6
6.5
7
7.5
8
8.5
9
9.5
10
10.5
11

20. Cash flow from operations
20102011
611250641783Cash from patients
1400922913Cash from other
activities
(249436)(289275)Cash to suppliers
(286564)(303870)Cash to employees
8925971551Net cash flow from
operations

21. Owner Equity
20102011
618276674328Revenue
580211648279Expense
448663485012Capital
4850125111061Owner equity
5.2
%

22. Revenue
6743282011
618276=616560+17162010
7.03%
By56 M

23. Revenue
revenue
2011 674.32
2010 618.27
400
450
500
550
600
650
700
2011
2010

24. Comments on Revenue
• The increase in operating revenue is largely due to the
expansion of the NHRMC physician network combined with
increased utilization of both inpatient and outpatient services
from the previous year.
• Other operating revenue consists primarily of cafeteria sales,
outpatient pharmacy sales, grants, contributions and rental
income from NHRMC owned facilities.

25. Comments on Revenue
• Net patient service revenue continues to be impacted by an
increase in unreimbursed services as health insurers shift
more reimbursement responsibility to individuals through
increased deductibles and co-pays along with an increase in
those individuals who have little or no health insurance or
other means of payment. These trends are consistent in the
healthcare industry.

26. Expenses
648279=641905+5146+12282011
578495=581376+5512010
12.06%

27. Expenses
Expenses
2011 648.2
2010 578.4
540
560
580
600
620
640
660
2011
2010

28. Comments on Expenses
• The expansion of the NHRMC physician network and
increased utilization of services as described above
contributed to the increase in operating expense.
• Costs for professional fees, insurance, and purchased services
rose above the rate of increase in revenues; costs for
personnel, medical supplies and depreciation rose at a rate
below revenue growth.
• During the years ended September 30, 2011 and 2010, NHRMC
granted and paid LCFH approximately $298 and $291,
respectively, in support of LCFH‟s Palliative Care Program.

29. Current assets
total
prepaid
expensesinventoryA/Rcashyear
169289115871573486145558232011
15694586561649078801529982010
7.9%

30. • The increase in current assets is primarily due to an increase in
patient accounts receivable.
• The increase in accounts receivable is attributable to
increased utilization of services and the expansion of the
NHRMC physician network.

31. Fixed assets
total
capital
assetsothers
donations &
investmentyear
779712432734662832806952011
757428418478680732708772010
3%

32. Total assets
$Year
9490012011
9143732010
3.79%

33. Assets
0
100
200
300
400
500
600
700
800
900
1000
current assets fixed assets total assets
2011
2010

34. capital
4850122011
4486632010
current assets - current liabilitiesworking capital
58820=110469-1692892011
55668=101277-1569452010
8.1%
5.4%

35. Capital & Working capital
capital working capital
2011 485.01 58.82
2010 448.66 55.66
0
50
100
150
200
250
300
350
400
450
500
2011
2010

36. Comments on capital
• The increase in capital assets reflects increases in
investments in capital improvements of NHRMC in
property, plant and equipment during the past year.
• Increases in noncurrent assets are the result of interest
earnings and unrealized gains / losses in the market value
of NHRMC investments

37. Net assets
• net assets= total assets – curent liabilities
year
838532=110469-9490012011
813096=101277-9143732010
5.4%

38. Net assets
500
550
600
650
700
750
800
850
900
net assets
2011
2010

39. Total Liabilities
20102011
101277110469Current Liabilities
328084327471Long Term Liabilities
429361437940Total Liabilities
9 %
2 %

40. Comments on Liabilities
•Total liabilities have increased by $8.6M over the past
fiscal year end. An increase in current liabilities
resulted primarily from:
• increase in trade payables,
• wages payable and
• self insured liability offset by a decrease in estimated third-
party payer settlements.

41. Liquidity Ratios
Current ratio
1.53:1169289
110469
2011
1.55:1156945
101277
2010

42. Liquidity Ratios
Quick ratio
• Current assets – inventories
current liabilities
• 169289-15734
110469 = 1.39:1
• 156945-16490
101277 = 1.39:1
2011
2010

43. Liquidity Ratios
Current Ratio Quick Ratio
2011 1.53 1.39
2010 1.55 1.39
1.3
1.35
1.4
1.45
1.5
1.55
1.6

44. Gross profit margin
• Gross profit / revenues=
674328+6198+1672-(368+64+137964+40967)
674326
= 74.57%
2011

45. Gross profit margin
• Gross profit / revenues=
616560+6175+7550+828 -(2544+54+30269+22503)
618276
= 76.94%
2010

46. Profit margin
• Profit margin= net profit before tax
revenue
• 26049
674328 = 3.86%
• 36349
618276 = 5.89%
2011
2010

47. Return on total assets
• net profit
total assets
• 26049
949001 = 2.74%
• 36349
914373 = 3.98%
2011
2010

48. Return on owner equity
• net profit
owner equity
• 26049
511061 = 5.09%
• 36349
485012 =7.49%
2011
2010

49. Return on capital employed
• 26049
838532 = 3.1%
• 36349
813096 = 4.47%
2011
2010

50. Return on investment
• profit before tax
initial investment
• 26049
485012+327471 =3.2%
• 36349
448663+328084 =4.67%
2011
2010

51. Profitability ratios
return on
total assets
Profit margin
Return on
owner equity
return on
capital
employed
Roi
2010 3.98 5.89 7.49 4.47 4.47
2011 2.74 3.86 5.09 3.1 3.2
0
1
2
3
4
5
6
7
8
2010
2011

52. Debt ratio
• Total debt
total assets
• 327471
949001 = 34.51%
• 328084
914373 = 35.88%
2011
2010

53. Times interest earned
• Profit before interest
interest change
• 13590+26049
13590 = 2.92 times
• 36349+13039
13039 =3.79 times
2011
2010

54. Capital Structure ratios
0
5
10
15
20
25
30
35
40
Times interest earned Debt ratio
2011
2010

55. Inventory turn over
• Cost of sales
average inventory
• 137964+40967 11.372
15743 = 365 day
=32.09
• 130269+22503 9.265
16490 = 365 day =39.39
2011
2010

56. A/R turn over ratio
• Sales (revenue)
account receivables
• 674328
86145 = 7.83 times
• 616560
78801 = 7.83 times
2011
2010

57. Collection period in days
• Sales
average inventory
• 365
7.83 = 46.62 days
• 365
7.83 =46.62 days
2011
2010

58. Recommendations
• To keep competitiveness of the NHRMC in a highly dynamic market,
we recommend:
1. To develop more healthcare services i.e. offering new and unique
services such as hospice and home care services.
2. To improve the quality of healthcare services and pursuing for
accreditation from more accrediting bodies such as American
osteopathic association, etc.
3. Diversification of services as well as backward integration with
suppliers to reduce the cost of sales.
4. Reduction of debt ratio.

59. Thanks a lot
• Mahmoud Fathy Eldefrawy Mobile Number: 01112343470
• Mohamed Hassan Radwan Mobile Number: 01000011032
• Faisel Edris
• Islam Nasr
• Mohamed Ismail Kohla