Question

Why is it necessary to rate the financial health of a hospital?

Answer 1

It is necessary to rate the financial health of the hospital to know its capabilities and ability of the hospital to renew itself financial indicators examine current or recent financial performances include the ability for current operations and existing capital the necessary cash requirements.

To know the real face of the hospital is the hospital running under a loss or it does have capability of supporting itself.

There are different dimensions

Revenue and expenses the first dimension of financial health is that revenue and expenses in balance more gently we should expect that revenue at least matches the expenses and most financial analyst would expect Institutions revenues to exceed expenses so as to finance increases in working capital and build funds as a cushion for a financial downturn.

The second measure is operating margin in computing operating margin only revenues from operational activities whether patient care or other are considered and expenses associated with non operating revenues such as the costs of managing investments.

III frequently used measure is patient care margin the margin on which on what is considered the core business of the hospital or Health Care institution for this major only revenues for patient services are considered and these are compared with the operating cost for patient care services revenues are usually recorded separately for each activity that builds for IT services and calculating estimated patient care revenues is relatively straight forward.

Financial indicators examine current or recent financial performances. including the ability to pay for the current operations an existing capital they do not look forward to access the ability to finance future operations or replace capital in general higher margins and more free cash flow indicates a stronger financial position and employee a greater ability to finance expansion other issues described in accounting text they also provide an indication of the ability to finance additional capital or replace the growth rate.