The document analyzes the financial performance of Johns Hopkins Hospital using various ratios. It finds that Johns Hopkins Hospital's total margin, operating margin, return on assets, and return on equity are all lower than industry averages. It provides recommendations to improve performance, such as expanding ambulatory care, workforce reductions, instituting an asset management program, and increasing collections. It also outlines implementation plans and monitoring methods to track performance improvements.

1. Running head: John hopkins financial 1
John hopkins financial 12
John Hopkins Financial Analysis
jjjjjjjjjj
xxxxxxxx
xxxxxxx
xxxxxxxx
April 28, 2018
Contents
General
Background……………………………………..……………………
………………...3
Issues/Problems
Identified………………...……………………………………………
……….4
Analysis of ratios and other Financial Analysis
tools….………………………………………5
Recommendations………….………………………………………
………………………..…6-7
Implementation
Plans.…………………………………………………………………

2. ………...8
Monitoring
Methodology……………………….…………………………………
……………..9
References……………...……….……………………………………
………………………….10Background
The start of this prestigious hospital dates to the late 1800’s
when a wealthy Quaker philanthropist Johns Hopkins passed
away. In his will, Johns Hopkins left seven million dollars to
the start of a free hospital and medical colleges for the area of
Baltimore, Maryland. Centuries later, Johns Hopkins Hospital is
ranked in the top five hospitals in the nation. JHH serves as a
leader in biomedical research, education, and treatment for the
United States of America.
Johns Hopkins Hospital has evolved to become a complex
system with six different hospitals, numerous healthcare sites,
and four surgery centers in different locations of the USA.
Issues / Problems Identified
An analysis of John Hopkins Health System was done using
several key ratios. This case study will identify the key
problems. It will also suggest solutions to the problems, an
implementation plan,and monitoring methodology.
According to the text,the total margin is the net income divided
by the total revenues it is important because it provides a
measure of a hospitals overall profitability. Analysts at the
primary measure of a hospitals profitability. The industry
average for total margin is 5%. According to the 2017 annual
report, John Hopkins Health had a total profit margin of 2.9%.
In comparison, UMass Memorial Health was 2.8. Both systems
were lower than the industry average.(1)

3. The operating margin is the operating income divided by
the total operating revenues. The industry average operating
margin is 3.5%. John Hopkins Health 2017 operating margin
was 2.5%. UMass Health had a slightly lower operating margin
of 1.7%.
The Return of assets is the net income divided by the total
assets. The ROA tells managers how productively, in a financial
sense, a business is using its assets. The higher the ROA, the
greater the net income on each dollar invested in assets and
hence the more productive the assets. The industry average is
4.8%. John Hopkins Health 2017 ROA was 3.7, which was
lower than the industry average. UMass Health was also lower
at 2.7.
The return of equity is net income divided by the total equity.
In a not-for-profit, the ROE is used to determine how well, in
financial terms, its community supplied capital isused. The
industry average for Return of Equity (ROE) is 8.4 percent.
John Hopkins health had a 4.3 percent return of equity, which
was lower than the industry average. Umass Health had a 6.9
percent (ROE) which was slightly better than JHHS, but still
lower than the industry average.
Analysis Utilizing ratios and Financial Analysis tools
Ratio John Hopkins UMASS Health
Industry Average
Total Margin 2.9% 2.8%
5.0%
Operating Margin 2.5% 1.7%
3.5%
Return on assets 3.7% 2.7%
4.8%
Return on Equity 4.3% 6.9%
8.4%Current Ratio 1.9% 1.7%
2.0%Day-Cash-on-Hand 808 days 41 days
31 days

4. Debt-to-Equity 53% 40% 73%
Recommendations:
Further analysis is required beyond the review of the financial
data to identify opportunities for increased revenues as well as
cost avoidance. Deeper dives into the coding and billing
processes, denial rate, as well as standardization of supplies to
identify if there are other avenues to increase revenue.
According to the Advisory Board (2017) the average hospital
has lost close to one million dollars net revenue loss over the
past four years due to penalties from pay for performance (P4P).
The Advisory Board also noted in 2016 that hospitals and health
systems showed significant weekend margins for the first time
since 2012. Hospitals must define and implement a multi-year
margin strategy. While in previous years volume and price
growth was enough to sustain margin weakness, it does not
appear that this will be the answer to the problem. Hospitals
must prioritize and focus on cost containment as the key
strategy to strengthen margins. According to the Advisory
Board (2016) organization-specific financial, operational and
quality data must be benchmarked to tailor margin strategy. It is
essential for hospitals to know their performance data and
benchmark themselves to local competitors and “like” hospitals
across the country.
Total Margin: (**increase collections/ increase successful
appeals**)
We would recommend that John Hopkins expand their
ambulatory and long-term care to manage populations within
their networks.They should join the network that is managing
their dollar, there are opportunities for financial growth,
delivering the right diagnosis and treatment at the right time;
this includes making sure patients receive the right medications
and nurses are moving patients through the hospital and

5. educating them about their medication regimen before
discharge.
Operating Margin: (**increase collections/ increase successful
appeals**)
We would recommend workforce reduction (primarily in non-
patient care areas), management restructuring and flattening
benefit changes, and an examination of operations and the way
work is done. Every aspect of support services would be
analyzed, including opportunities to consolidate service
contracts, consolidate programs, streamline vendor
relationships, improve supply chain, and cut waste.
Return on Assets: (assets=equipment, property, receivables,
land. Reduce what is owed**)
We would recommend instituting an enterprise asset
management (EAM)program. EAM is management of an
enterprise’s assets across all departments, facilities, business
units and geographical locations. EAM integrates techniques for
holistic control and optimization throughout those assets’
varying lifecycles. It brings together planning, acquisition,
commissioning, operations and eventual replacement.
Once implemented, EAM’s benefits are substantial. A
successful EAM program could save John Hopkins between 5
and 20 percent in annual capital equipment purchases.
Return on Equity (**increase revenue, decrease costs**)
We would recommend increasing the return on equity by
reducing overall costs.
An example of this would be to reduce or eliminate
unnecessary tests in a way that does not shortchange or
endanger the patients. Reducing length of stay can be done
through preventing errors that would extend a stay or delay a
discharge when patients are medically ready to go home.
Because of miscommunication, poor planning, or when families
or nursing homes are not yet ready to take on the person that is
being discharged, a four-day stay can suddenly turn into a five-
or six-day stay. These process-related things are not medical
issues, but they often extend length of stay which can cost

6. millions.
Implementation Plans
Consider revenue integrity specialist to identify if
coding/billing is optimal. Improved MD documentation will
lead to increased DRG reimbursement and appropriately capture
MCCs→ can be reflected in risk-adjusted quality data.
Standardizations of practice and order-sets will decrease
variability. Ensure that all supplies are on the HPG contracts so
that costs will be the lowest possible. Monitor supply utilization
& partner with MDs and Clinical staff to reduce waste. Hire
inventory supply (materials management) specialists to monitor
supply utilization and limit who can order supplies.
increase point of service cash collections, even collecting
twenty dollars per patient at the time of the visit will increase
revenue.
Monitoring Methodology
(**internal benchmarks to gauge performance**)
· comparing JH to itself throughout the quarters and against
comparable hospitals.

7. References
1. https://www.hopkinsmedicine.org/about/downloads/jhm-
brief.pdf
2. https://emma.msrb.org/ER1106106-ER865043-.pdf
3.
http://www.hscrc.state.md.us/Documents/Hospitals/Reports
Financial/Audited/fy-2014/0009_JHH_AFS_FY14.pdf
4. https://www.hopkinsmedicine.org/about/index.html
5. http://nonprofits.findthecompany.com/l/422333/The-Johns-
Hopkins-Hospital
6.
http://brand.hopkinsmedicine.org/gui/content.asp?w=pages
&r=5&pid=186
7. https://www.beckershospitalreview.com/hospital-
management-administration/massachusetts-general-vs-johns-
hopkins-6-key-comparisons.html
8. https://www.beckershospitalreview.com/finance/40-
financial-benchmarks-for-hospital-executives-august11.html
Discussion question
What are the significant barriers in obtaining and maintaining
peer relationships for students with physical and health
impairment? How can teachers facilitate these relationships?