An operational indicator used by financial analysts, this ratio is a measure of how efficiently hospital assets are converted to revenue. The ratio’s numerator is net patient revenue plus total other income, and the denominator is total assets. A higher ratio is generally viewed as a positive indicator; however, it should not be viewed in isolation, but in combination with other financial data.
Hospitals are capital-intensive because of the specialized equipment used in the delivery of care and their 24/7 operation. The standard ratio value is 1.0. For-profit hospitals have a ratio of 1.68, nonprofit hospitals have a ratio of 1.0 and public hospitals have a ratio of 1.01, according to AHA DataViewer. Knowing how your hospital compares with similar organizations can help to identify short- and long-term goals and areas for improvement.
For more information about AHA DataViewer, visit www.ahadataviewer.com.