Hospital finances

Financial health of a Dutch hospital

We expect from a hospital that they give their patients the best possible treatment. However, hospitals are on a budget too. And they can only provide good care when they have sufficient financial means.

Solvency

Accountants express the financial health of a corporation by five financial ratios. One of these is the solvency, which expresses the ability to meet its long-term fixed expenses. The Figure shows the solvency of a particular Dutch hospital, and its prediction for the book year 2019.

The red dots display the solvency from the book years 2012 though 2018, with 2014 missing, and a prediction for 2019. The values fluctuate between 0.1 and 0.2, and there seems no clear cause for any worries. However, appearances are deceiving.

The grey background shadings show the financial development of some 60 other Dutch hospitals. For the book year 2012 the solvency of this hospital was mid range of the grey shading. But over time the solvency is dropping below the financial developments of its peers. This hospital has a questionable financial health. Possibly with consequences for the care for their patients.

Financial ratio investigations

Ratio data are a common metric for assessing the financial health of a company. In this 10 minute animation the basics of financial ratio data analysis is explained. The aim is to provide handles to investigate financial manipulations, or fraud detection.

We have used real data from some 60 Dutch hospitals to demonstrate the principles of data analysis. However, in principle these methods can be used for any line of business.

Disclaimer: This animation is produced for educational purposes alone. We do not suggest that we have found any malpractices.

Data Source

Public / private data.

Copyright

© 2019 Bontekoe Research, Amsterdam. Partner in NARMA42.