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Applying an eMASS Customization Program as a Research Tool to Evaluate Consumer Benefits
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Using MVA and EVA to measure financial performance.

L C Gapenski1

  • 1University of Florida, Gainesville, USA.

Healthcare Financial Management : Journal of the Healthcare Financial Management Association
|February 7, 1996
PubMed
Summary

Market Value Added (MVA) and Economic Value Added (EVA) are increasingly used financial performance measures in healthcare. MVA suits investor-owned groups, while EVA is best for not-for-profits, offering a fuller financial picture.

Area of Science:

  • Healthcare Financial Management
  • Accounting and Finance
  • Organizational Performance Measurement

Background:

  • Traditional profitability measures in healthcare often overlook the cost of equity capital.
  • Market Value Added (MVA) and Economic Value Added (EVA) are emerging as advanced financial performance metrics.
  • These metrics are gaining traction in both investor-owned and not-for-profit healthcare sectors.

Purpose of the Study:

  • To introduce and differentiate Market Value Added (MVA) and Economic Value Added (EVA) as financial performance tools.
  • To highlight the specific applicability of MVA for investor-owned healthcare organizations.
  • To emphasize the suitability of EVA for not-for-profit healthcare organizations.

Main Methods:

  • Comparative analysis of financial performance measures.

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  • Discussion of the theoretical underpinnings of MVA and EVA.
  • Application context for different healthcare organizational structures.
  • Main Results:

    • MVA and EVA incorporate the cost of equity capital, offering a more comprehensive view than traditional metrics.
    • MVA is identified as the most appropriate measure for investor-owned healthcare entities.
    • EVA is determined to be the optimal measure for not-for-profit healthcare entities.

    Conclusions:

    • MVA and EVA represent significant advancements in healthcare financial performance assessment.
    • Wider adoption of MVA and EVA is anticipated as financial managers gain familiarity.
    • These measures can enhance the evaluation of financial health in diverse healthcare organizations.