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Akash Bhatia
Healthcare Accounting 3311.001
December 3, 2014
Aspirus Wausau Hospital Inc.
Aspirus Wausau Hospital is a non-profit hospital organization founded
in 1998 based in Wausau, Wisconsin providing a wide array of services along
with 35 specialties. The Aspirus network staffs over 6,500 employees of
which include 350 physicians covering four hospitals in Michigan and three
hospitals in Wisconsin along with roughly fifty clinics. The Aspirus Wausau
Hospital averages a daily inpatient census of 160 totaling up to 15,00 for the
year. Outpatient visits far exceed inpatient-surpassing 50,000 with an
addition of 24,000 annual emergency visits. The mission of the Aspirus
network lies behind the notion of excellent service is provided thru excellent
leadership thus being able to provide patient care at an affordable rate.
Aspirus Wausau Hospitals corporate structure contains 321-bed acute
care center, while Memorial Health Center (MHC) in Medford, Wisconsin, has
25-bed acute care hospital. Memorial Health Center is categorized under a
critical access hospital with Medicare and Medicaid, 101 bed skilled nursing
facility, a 28 unit assisted living and clinics to assist others. Memorial Health
Center and Aspirus Wausau Hospital operate under one umbrella of Aspirus
Wausau Hospital, Inc. They are able to provide, medical, emergency, clinical
services and outpatient services along with services to Wisconsin residents.
Both hospitals are able to finance capital as one and are obligated to debt

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services on all bonds of the Obligated Group. Aspirus Wausau Hospital
considers any debt instrument with maturity of three months or younger to
be cash equivalent. This will exclude any amounts held as investments of
short-term in a portfolio.
Aspirus Wausau Hospital, Inc. filed the 2011 and 2012 financials with
Ernst & Young, a leading accounting firm. With financial statement available
for the public to be seen since Aspirus Inc. is a not-for profit hospital. A notfor profit corporation has benefits of exemption from federal and state
income taxes, property and sales taxes, a lower rate on postal, a tax-exempt
financing and annuities for employees. Without the interest of shareholders,
Aspirus relies on revenue, grants and endowments. Currently Aspirus
Wausau Hospital sits on $475,789,000 on total assets, which include: cash,
receivables, inventory, property and equipment and other assets. With a
total net income of $33,150,000, the return on assets is calculated to be
6.97% in 2012. According to Beckers Hospital Review, the industry average
for return on assets was about 4.5%, nearly 2 percent lower than Aspirus
Wausaus percentage. Thus Aspirus Wausau Hospital is doing better than
industry average for the 2012 year. Using net income and dividing it by the
total revenues calculated AWHs total profit margin. The total profit margin
will measure the amount of profit per dollar of revenues. The industry
average is roughly 6.8%, however, AWH performed much better with 8.16%.
Thus, AWH makes 8.16 cents for every dollar of total revenues, which will
include operating, and non-operating incomes.

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Aspirus Wausau Hospitals return on equity (ROE) can be calculated by
dividing total equity by the net income, which came out to be 10.8%. When
comparing the ROE for AWH to the industry average, AWH is nearly 16%
below. For non-profit organizations the ROE will provide information for the
board of trustees and mangers how well financially the community-supplied
capital is doing. Along with ROE managers first concern is the firms liquidity,
the ability for the hospital to meet the cash obligations when they are due.
The current industry average is 2.0 while the Current ratio for AWH is 3.8. By
knowing the current ratio this tells managers that AWHs current assets at
book value provide $3.80 for ever $1 of current liabilities. Liquidity is actually
more closely related to the cash flow rather than the assets and liabilities.
Days-cash-on-hand ratio goes hand in hand in determining the true liquidity.
The days cash on hand ratio will help determine the number of days it will
take for a business to run out of cash if no revenue or financing is occurring.
AWHs days cash on hand is 242.2 days. Compared to the industry average
of 22.6 days, AWH has an abundant amount of cash.
Aspirus Wausau Hospital minimal concern will be the debt ratio, the
measure of proportion of debt in a businesss total finances. The debt ratio
can be calculated by dividing total assets be total liabilities, the industry
average of 63% while AWH is 35.40%. The debt ratio will cover all debt,
including current liabilities and long-term debt except equity. The lower the
debt ratio, the greater playing room a hospital will have without worrying
about creditors and losses in event of liquidation or bankruptcy. The debt-to-

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capitalization ratio is long term debt divided by long-term capital and will be
more attentive towards the proportion of debt used in a businesss
permanent capital structure. The industry average of 28.6% while AWH is
30.30%, according to analysts the debt-to-capitalization ratio will best show
the capital structure. In essence the higher the ratio, the greater use of
financial leverage.
The times interest earned ratio will help managers learn how much
earnings could possibly come down before the hospital will have issues
meeting its interest payments; this ratio is the most basic coverage ratio.
The industry average of 5.9 is low compared to AWHs 14.8. This ratio will
indicate the extent to which income can come down before it will be less
than annual interest costs. Failure to pay the creditors interest could possibly
lead to legal issues and bankruptcy. For AWH $14.80 of accounting income
will pay each dollar of interest expense, a large safety net. Following the
times interest earned ratio will be the cash flow coverage ratio which
measures the amount of cash flow generated by a business per dollar of
fixed expense. The CFC ratio will tell managers that a business has enough
cash flow to cover the fixed payments. The industry average of 2.8 is almost
on par by AWH ratio of 2.42.
The following ratios are the asset management ratios, they measure if
a businesss assets are being used to full potential. By having to many assets
a business will greater capital costs and profits will be lower. However, if
there are not enough assets, then a business could be losing opportunities.

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The fixed asset turnover ratio measures the utilization of plant and
equipment. The industry average of 31.4 is stumped compared to AWH ratio
of 63.4. AWH ratio indicates that the fixed assets bring in $60.40 in revenue.
Another ratio is the total asset turnover ratio that will measure the amount of
revenue generated by each dollar of the total assets. The industry average of
1.4 is much higher than AWH ratio of 0.85. The ratio is calculated by dividing
total revenues by total assets.
The final ratio of days in accounts receivable will show the average
length of time it will take for AWH to collect the receivables. The industry
average to recover cash is 55.2 days; AWH is able to recover cash in roughly
60.23 days. AWH is not doing a very good job in collecting its receivables
when comparing to industry average. It can be analyzed that the payers are
slower or the billing could be more archaic which is causing the delay. AWH
should implement a new program to help recover the receivables at a
quicker rate.
Aspirus Wausau Hospital provides a unique program for patients who
no longer need acute care in a hospital but need rehabilitation before
returning home, swing bed program. The Swing Bed program allows patients
to stay short-term for various conditions such as: heart disease, antibiotic
therapy, joint replacement, and more. The Swing Bed program provides
skilled nurses and physicians 24 hours a day along with different therapists.
Before returning home, evaluations are done of the patients ability to
conduct ADLs (activities of daily living) and a home evaluation making sure

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the patient will be danger free at home. The Swing Bed Program is rendered
to Medicare program beneficiaries are collected thru cost-reimbursement
methodology except for any laboratory fee that may occur. Nursing home
patient care is predetermined thru a rate that is per patient day determined
by the level care needed for ADL (activities of daily living).
Aspirus Wausau Hospital can be considered as a price-setter due its
vast size and capabilities. Price-setter are defined by having a large market
share and dominance in a region. Within certain limits, Aspirus Wausau
Hospital has the ability decide prices on services offered. Aspirus Inc. serves
fourteen counties in Wisconsin along with some in Michigan. The system has
four hospitals in Michigan and three in Wisconsin with fifty smaller clinics
accessible for others. With such a large market share, Aspirus Inc. can be
defined as a price setter.
Aspirus Wausau Hospital offers a wide array of services: a Newborn
Intensive Care Unit, heart/lung/weight loss surgeries, hospice services, and
much more. Along with the 350 physicians, nurses become a vital
component for patient care. In industry practices, average primary care
practice has about 5 FTE physicians (full-time equivalent). For a practice,
about two nonphysician providers (physician assistant or nurse and a support
staff of about 25. Thus each physician has more than five individuals working
to support their patient service activities. As of June 30, 2012, AWH is in need
of more employees of which are mainly registered nurses. The corporation
nurse vacancy rate is 4.7%. As of June 30, 2012 Aspirus Wausau Hospital

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employed 2,344 full and part-time employees of which 1,885 are full-time
equivalent positions. AWH currently does not have any unions.
The Obligated Group sponsors Aspirus Wausau Hospital retirement
plans, which cover certain management employees. A contribution of 9% to
17% of a qualifying employees eligible compensation can be compensated.
The total liability for the retirement plan as of 2012 was recorded to be
$937,000. Along with pensions, AWH provides certain medical benefits to
retired employees who were hired before January 1, 2003. The benefits are
eligible for the employee and dependents up until Medicare is available. AWH
recognizes the cost in the balance sheet as postretirement benefit plan, in
2012 it was recorded to be $1,623,000 respectively.
Aspirus Wausau Hospital in 2012 performed better than industry
average. Under a large umbrella of Aspirus, Inc. AWH is able to be a price
setter due to the vastness and services provided in the region. By examining
the financial statement and ratios, AWH has a bright future if it stays on path
with the mission.

Ratios
Total (profit) Margin

8.16%

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Operating Margin
Return On Assets (ROA)
Return On Equity (ROE)
Current Ratio
Days Cash On Hand
Debt Ratio
Capitalization Ratio
Times-Interest-Earned Ratio
Cash Flow Coverage (CFC) Ratio
Fixed Assets Turnover Ratio
Total Assets Turnover Ratio
Average Collection Period

9.22%
6.97%
10.80%
3.80%
242.7
35.40%
30.30%
14.80
2.42
63.4
0.85
60.23

Bibliography
http://www.aspirus.org/AspirusWausauHospital/Our-Locations/518.aspx

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http://www.beckershospitalreview.com/lists/200-hospital-benchmarksoctober-2012.html
http://health.usnews.com/best-hospitals/area/wi/aspirus-wausau-hospital6452085