1. What is Healthcare Retention Ratio?

The Healthcare Retention Ratio measures the proportion of income retained by a healthcare organization after accounting for distributions. It indicates financial health and sustainability.

2. How Does the Calculator Work?

The calculator uses the retention formula:

Where:

• \( Distributions \) — Total amount paid out (USD)
• \( Income \) — Total revenue or income (USD)

Explanation: The ratio shows what percentage of income is retained by the organization for reinvestment or reserves.

3. Importance of Retention Calculation

Details: A higher retention ratio indicates better financial stability and ability to fund future operations and growth in healthcare organizations.

4. Using the Calculator

Tips: Enter distributions and income in USD. Both values must be positive numbers, with income greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is a good retention ratio for healthcare organizations?
A: Typically 0.7-0.9 (70-90%) is considered healthy, but this varies by organization size and type.

Q2: How often should retention ratio be calculated?
A: Most organizations calculate it quarterly or annually as part of financial reporting.

Q3: What counts as distributions?
A: Includes dividends, owner withdrawals, profit sharing, and other cash outflows to stakeholders.

Q4: Can retention ratio be negative?
A: Yes, if distributions exceed income, indicating financial trouble.

Q5: How does this differ from profit margin?
A: Retention ratio focuses on cash flow after distributions, while profit margin measures income after expenses but before distributions.