AVRMC cost to charge ratios disclosed at La Junta City Council

The overall well-being of the Arkansas Valley Regional Medical Center is calculated by the cost-to-charge ratios. La Junta Councilwoman Elaine McIntyre disclosed the latest report figures to members of the La Junta City Council meeting on Monday night.

The cost-to-charge ratio is the ratio between a hospital’s expenses and what they charge. The closer the cost-to-charge ratio is to 1 percent, the less difference there is between the actual costs incurred and the hospital’s charges.

The goal for the total margin cost-to-charge ratio is set at more than one percent. The actual cost-to-charge ratio is 4.2 percent, which is a positive check for the hospital.

The current ratio has a target of more than two percent and an actual ratio of 3.6 percent. This is also a positive check.

The Days Cash on Hand is supposed to be more than 40 days, but is actually 36 days, so this area needs work, as does the Average Age of Plant, supposed to be less than 12 years, but is actually 18 years. Some help in this area may be accomplished with the addition of the nursing home facility currently in the works. It would relieve the necessity for using so much of the old facility for nursing home care.

The Debt to Total Capital ratio is hoped to be less than 60 percent. Actual ratio is 14 percent, which is a positive check for the hospital. The same is true of the Debt Service Coverage, which is expected to be more than 1.5 and is actually nine.