Hospital capital structure decisions: theory and practice

Area of Science:

• Healthcare Management
• Financial Economics
• Hospital Administration

Background:

• Capital structure theory is crucial for understanding financial decision-making in organizations.
• Hospitals face unique financial challenges influencing their capitalisation strategies.
• Existing theories may not fully capture the nuances of hospital financial management.

Purpose of the Study:

• To theoretically evaluate capital structure theory within the hospital sector.
• To investigate the practical capitalisation decision-making processes of hospital chief financial officers (CFOs).
• To analyze the alignment between theoretical models and actual practices in hospital finance.

Main Methods:

• Theoretical analysis of capital structure theories applied to hospitals.
• Qualitative research involving interviews with hospital CFOs.
• Comparative analysis of theoretical propositions and empirical findings.

Main Results:

• Hospital CFOs' decision-making processes are influenced by both theoretical financial principles and practical operational constraints.
• A gap exists between traditional capital structure theory and the specific realities of hospital financing.
• Key factors influencing hospital capital decisions include risk, profitability, and strategic objectives.

Conclusions:

• Capitalisation decisions in hospitals require a nuanced approach that integrates financial theory with practical insights.
• Further refinement of capital structure models is needed to better represent the hospital industry.
• Understanding CFO perspectives is vital for improving financial strategies in healthcare organizations.