While hospitals exist to meet the healthcare needs of the communities they serve, one fact that is often overlooked is that they are complex businesses that require fine attention to detail, both operationally and financially.

As Trustees or Board members the tendency is to focus solely on the bottom line. But the real issue, regardless of the bottom line, is what constitutes that number and what do the numbers actually mean?

The true measure of the financial performance of your institution is the Balance Sheet. While important to understand, the numbers presented and reviewed on the Operating Statement can be deceiving. When looking at the numbers you need to always consider the relationship of revenues to profit or loss.

What is not in the numbers is more important to the future of your hospital than the financial statements themselves. Questions that arise are:

• Is Net Revenue reflective of cash collected?
• Are significant variations in expense explainable?
• What constitutes our operating margin?
• What services or programs generate profits? Create losses?
• Risk to the institution should it loose a particular line of business?
• What profitable lines of business are susceptible to physician or technological changes?
• Are we investing or re-engineering the right lines of business or market segments?

These questions and many more are indicative of the type of information your current management team should be providing to you as a Board. The quality of the numbers combined with the ability to address the fine operational details and provide prudent explanations to variances are more important than presenting result summaries.

Many times, Trustees or Board members feel uncomfortable in asking pointed questions to current management. Mistakenly, many believe that fiscal year end audits by outside auditors suffice to tell the true picture.

Advanced Hospital Management provides Board of Director consulting services that go beyond mere cursory review or audit. We'll ask the tough questions look at the operational and financial details and provide you and your Board a confidential, thorough written analysis presented in a clear and concise manner.