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Are hospital managers served by current models for predicting financial distress?
Health Care Strategic Management
|March 11, 1987
Summary
Most hospital financial distress models are flawed, limiting their use for managers and policymakers. This study reviews financial and hospital survival models, highlighting critical limitations in predicting healthcare financial failure.
Area of Science:
- Healthcare Management
- Financial Analysis
- Health Economics
Background:
- The healthcare industry faces significant competitive changes, increasing the need for operational efficiency.
- Hospitals are increasingly focused on financial condition and predicting financial distress.
Purpose of the Study:
- To synthesize finance studies on firm failure and compare them with hospital survival research.
- To evaluate the effectiveness of current models for predicting hospital financial distress.
Main Methods:
- Literature synthesis of financial firm failure models.
- Comparative analysis with recent hospital survival studies.
Main Results:
- Most models predicting hospital financial distress are found to be restricted or flawed.
- Existing models may not accurately serve hospital managers or public policy objectives.
Conclusions:
- There is a critical need to reassess and improve models used for predicting hospital financial distress.
- The utility of current predictive models for healthcare financial management and policy is questionable.
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