Since the late 1980s, scholars have actively sought to pinpoint the factors that influence the profitability of hospitals, and to explore hospital management plans.
The profitability indicator of hospitals is the most important and ultimate standard that shows their business performance. Furthermore, with regard to the characteristics of individual financial variables, they found that health centers in cities, and those with many chronically ill patients and prenatal care users, tended to show superior financial performance. After determining the financial performance trend of health centers, Younis et al announced the findings that revenue from donations, medical insurance for the disabled, the cost of visiting, and medical personnel expenses have, in general, increased, whereas the general productivity of medical specialists has decreased. Bolon et al argued that the significant financial ratios are profitability, capital structure, working capital efficiency, fixed asset efficiency, fixed asset acquisition period, liquidity, net income to stockholders' equity, and debt service coverage ratio. Trinh et al hold that profitability, fixed asset efficiency, capital structure, years of fixed asset acquisition, working capital efficiency, liquidity, and debt service coverage ratio are the indicators that can accurately explain the financial performance of hospitals. They then highlighted working capital flow, net income to stockholders' equity, and cash flow as indicators reflecting a hospital's characteristics. Goldstein et al analyzed the differences in financial ratios between the manufacturing industry and hospitals, and selected eight vital financial ratios: return on assets, cash holdings, debt structure, working capital flow, net income to stockholders' equity, short-term liquidity, accounts receivable recovery, and cash flow. A study by Cleverley et al that examined all hospitals in the United States revealed that profitability, short-term cash holdings, and capital structure are indicators with high explanation power.
Thus far, studies conducted by associating financial ratios with the business performance of hospitals have showed the following results. These indicators have long been acknowledged as essential prerequisites for external stakeholders such as investors and creditors, as well as internal stakeholders such as managers to make business decisions. It is therefore easy to determine the financial position and business performance of the organization. The financial ratio indicators of hospitals display the relationships among items included in the financial statements in the form of ratios. įor efficient management of hospitals, it is important to achieve profitability to do so, hospitals must identify all the factors that influence profitability, and come up with a management plan. Such hospitals had settled into a bureaucratic mode now, however, national institutions must also increase profitability through financial soundness and management efficiency. In particular, given the current emphasis on patient-centered management and efficiency, there has been a growing tendency to criticize the operational methods of national university hospitals.
Moreover, most hospitals cannot avoid an annual financial deficit this keeps national university hospitals from being optimistic regarding their growth prospects. However, due to their bureaucracy and inefficiency of management, these hospitals are not well regarded by the patients who visit them. Moreover, as key organizations in the public medical delivery system, national university hospitals play a leading role in the hospital services of each metropolitan administration unit in terms of three aspects: medical treatment, research, and education. Unlike private hospitals that are managed for profitability, national university hospitals are special organizations that provide the medical services equivalent of public goods.
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