Project of finance under supervision of :Dr. khaled Bahaa El-Din

GROUP OF NEW HANOVER REGIONAL MEDICAL CENTER

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%

• 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

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.

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.

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.

Accreditations• Have many of accreditations such as:

• Joint Commission on the Accreditation of Healthcare Organizations

• Cardiac and Pulmonary Rehabilitation

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.

Vision

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

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

Balance SheetSeptember 30, 2010

September 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

485012 511061 Owner Equity

Balance sheet

Income StatementSeptember 30, 2010

September 30, 2011

599018 655690 ( 9.5%) Net Patient service revenue

17542 18638 Other revenue

618276 674328 ( 9%) Total operating revenue

287103 305257 Salaries, wages, benefits

130269 137964 Medical supplies

22503 40967 ( 82%) Professional fees

10903 13287 Insurance

87946 100973 Purchased services

42652 43457 Depreciation and amortization

1716 (5146) Non operating revenues

(551) (1228) Capital contributions from / to component units

580211 648279 ( 11.7%) Total expenses

36349 26049 ( 28.3%) Net profit

Income statement

Income Statement

Tot. operating rev-enue

Tot. expenses Net Profit

2011 6.74 6.48 2.6

2010 6.18 5.8 3.63

0.5

1.5

2.5

3.5

4.5

5.5

6.5

7.5

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.

Cash Flow

2010 2011 cash flow

89259 71551 from operating activities

2195 2261from non capital financing activities

-(76166) -(70694) from capital financing activities

5209 -(8662)from investing activities

20497 -(5544) net

81283 101780 at beging of year

101780 96236 at end of year5.4%

19.8%

266%

7.1%

Cash Flow

5.25

5.75

6.25

6.75

7.25

7.75

8.25

8.75

9.25

9.75

10.25

10.75

Cash flow from operations 2010 2011

611250 641783 Cash from patients

14009 22913 Cash from other activities

(249436) (289275) Cash to suppliers

(286564) (303870) Cash to employees

89259 71551 Net cash flow from operations

Owner Equity

2010 2011618276 674328 Revenue

580211 648279 Expense

448663 485012 Capital

485012 5111061 Owner equity5.2

%

Revenue

674328 2011

618276=616560+1716 2010

7.03%By56

M

Revenue

425

475

525

575

625

675

20112010

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.

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.

Expenses

648279=641905+5146+1228 2011

578495=581376+551 2010

12.06%

Expenses

550

570

590

610

630

650

20112010

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.

Current assets

totalprepaid expenses inventory A/R cash year

169289 11587 15734 86145 55823 2011

156945 8656 16490 78801 52998 2010

7.9%

• 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.

Fixed assets

totalcapital assets others

donations & investment year

779712 432734 66283 280695 2011

757428 418478 68073 270877 2010

3%

Total assets

$ Year

949001 2011

914373 20103.79%

Assets

current assets fixed assets total assets0

100

200

300

400

500

600

700

800

900

1000

20112010

capital

485012 2011

448663 2010

current assets - current liabilities working capital

58820=110469-169289 2011

55668=101277-156945 2010

8.1%

5.4%

Capital & Working capital

capital working capital

2011 485.01 58.82

2010 448.66 55.66

25

75

125

175

225

275

325

375

425

475

20112010

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

Net assets• net assets= total assets – curent liabilities

year

838532=110469-949001 2011

813096=101277-914373 2010

5.4%

Net assets

net assets500

550

600

650

700

750

800

850

900

20112010

Total Liabilities2010 2011

101277 110469 Current Liabilities

328084 327471 Long Term Liabilities

429361 437940 Total Liabilities

9 %

2 %

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.

Liquidity RatiosCurrent ratio

1.53:1 169289110469

2011

1.55:1 156945101277

2010

Liquidity RatiosQuick ratio

• Current assets – inventories current liabilities

• 169289-15734

110469 = 1.39:1

• 156945-16490101277 = 1.39:1

2011

2010

Liquidity Ratios

Current Ratio Quick Ratio

2011 1.53 1.39

2010 1.55 1.39

1.325

1.375

1.425

1.475

1.525

1.575

Gross profit margin

• Gross profit / revenues=

674328+6198+1672-(368+64+137964+40967)

674326

= 74.57%

2011

Gross profit margin• Gross profit / revenues=

616560+6175+7550+828 -(2544+54+30269+22503)

618276

= 76.94%

2010

Profit margin• Profit margin= net profit before tax

revenue• 26049674328 = 3.86%

• 36349618276 = 5.89%

2011

2010

Return on total assets• net profit total assets

• 26049949001 = 2.74%

• 36349914373 = 3.98%

2011

2010

Return on owner equity• net profitowner equity

• 26049511061 = 5.09%

• 36349485012 =7.49%

2011

2010

Return on capital employed

• 26049838532 = 3.1%

• 36349813096 = 4.47%

2011

2010

Return on investment• profit before tax initial investment

• 26049485012+327471 =3.2%

• 36349

448663+328084 =4.67%

2011

2010

Profitability ratios

return on total as-

sets

Profit margin

Return on owner eq-

uity

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

0.5

1.5

2.5

3.5

4.5

5.5

6.5

7.5

20102011

Debt ratio• Total debttotal assets

• 327471 949001 = 34.51%

• 328084914373 = 35.88%

2011

2010

Times interest earned• Profit before interest interest change

• 13590+26049 13590 = 2.92 times

• 36349+13039 13039 =3.79 times

2011

2010

Capital Structure ratios

Times interest earned Debt ratio0

5

10

15

20

25

30

35

40

20112010

Inventory turn over• Cost of sales average inventory

• 137964+40967 11.37215743 = 365 day

=32.09

• 130269+22503 9.265

16490 = 365 day =39.39

2011

2010

A/R turn over ratio• Sales (revenue) account receivables

• 674328

86145 = 7.83 times

• 616560

78801 = 7.83 times

2011

2010

Collection period in days• Salesaverage inventory

• 3657.83 = 46.62 days

• 3657.83 =46.62 days

2011

2010

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.

Thanks a lot• Mahmoud Fathy Eldefrawy Mobile Number: 01112343470

• Mohamed Hassan Radwan Mobile Number: 01000011032

• Faisel Edris

• Islam Nasr

• Mohamed Ismail Kohla