Health Care Finance, the Performance of Public Hospitals and Financial Statement Analysis

Abstract

Regional form of Organization of the health care that are called today DyPE, have as a main
\ngoal to promote more rational resource allocation through decentralization in the decision
\nmaking process. The concern for more effective and efficient use of resources devoted into
\nthe health care sector renders hospitals a critical vehicle of the quest for superior economic
\nperformance, especially if we take into our consideration their mounting over time deficits.
\nEconomic performance is primarily traced through a set of specific financial ratios, which
\nembrace important elements that constitute the substance of the financial well-being of
\nhospitals as economic units. An array of financial ratios is critically reviewed and a
\ncombination of them is proposed as a means of effective financial management. The later is
\nnecessary to ameliorate the funding strain imposed on the health care system and especially
\non hospitals. The financial performance is determined by the return on capital (profitability)
\nin connection with the risk involved. Both factors determine the value created, which in turn
\naffects the amount of financing attracted in the sector. The financial information available
\nto the supervising regional bodies (DyPE), don’t considered sufficient for their management
\nto assess financial management of hospitals effectively. The lack of the appropriate economic
\ndata is due to the fact that double entry accounting has not yet fully adopted by the economic
\nunits that report to the corresponding DyPE. So, double entry accounting is prerequisite for
\nreporting and monitoring acceptable financial performance. The later is vital in securing
\nthat the financial needs of the health sector that are growing at an ever accelerating pace,
\nare met.