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Healthcare Financial Viability and Financial Measures

I need to work on the different Financial Measures for Healthcare Organizations which explains how financial statements are used to evaluate the financial viability of a hospital. Please include an example of a hospital that has a weak financial position and why it is weak. I also need at least 3 primary source references with publication dates less than 18 months old.

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Interesting question, indeed. Please see attached response, which is also presented below. I have also provided two articles and many other links of primary sources to draw on. I hope this helps and take care.

RESPONSE:

Let's look at the definition of financial viability first, and then how financial statements can be used to evaluate the financial viability of an organization, including a hospital. The following response draws almost exclusively from the article attached, which is available online at http://web.idrc.ca/fr/ev-30226-201-1-DO_TOPIC.html as well. In number three, there are other relevant article with other financial measures relating to financial statements as well.

1. I need to work on the different Financial Measures for Healthcare Organizations which explains how financial statements are used to evaluate the financial viability of a hospital.

Definition

Financial viability is the hospital's ability to maintain the inflow of financial resources greater than the outflow.
Organizations can be relatively effective, efficient and relevant to most of their stakeholders, yet on the verge of collapse. How can this be? Over the past three years, the authors have worked with government and not-for-profit organizations, which made them, realize that to perform well, an organization must also pay attention to its ability to generate the resources it requires. This means not only having the ability to pay its operational bills, but also having some excess of revenues over expenses (profit or surplus) (Booth, 1996). Whether in the private sector, where profits are a measure of financial health, or in public sectors that rely on funding or loans from government or development banks, financial viability is a key short- and long-term concern.

The authors of this chapter have added financial viability as a performance criterion since our 1995 volume. This is because of the large number of not-for-profit and government organizations that today are required to be more market driven. They must focus more attention on the demand and revenue side of their work rather than just the supply side (Henke, 1992). This concept is easily grasped in the private sector, but less so by organizations supported by taxpayers. By financial viability, they mean the ability of an organization to raise the funds required to meet its functional requirements in the short, medium and long term.

Dimensions

There are three dimensions to assessing the financial viability of an organization. The first relates to the ability of an organization to generate enough cash to pay its bills, and in the case of not-for-profit ...

Solution Summary

Referring to financial measures for Healthcare Organizations, this solution explains how financial statements are used to evaluate the financial viability of a hospital. This solution specifically identifies an example of a hospital that has a weak financial position and explains why it is weak, and then contrasts it with an example of a healthcare organization that is financially viable. At least three primary source references with publication dates less than 18 months old are provided, including two articles on performance measures and healthcare financial viability.

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