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Is the risk of failure increasing in the hospital industry?
Abstract:
Is the risk of failure increasing? According to a survey of U.S. hospitals conducted by Touche Ross & Co., 46 percent of the hospitals responding to the survey say their institutions are at risk of failure within the next five years, an increase of 3 percent from two years ago. Hospitals in all bed size categories express a greater risk of failure in 1988 than in 1986, and the smaller hospitals, which represented the largest portion at risk of failure in 1986, feel even more at risk now. Clearly, the health-care industry is moving into a period of transition that will affect the very structure of health-care delivery.
Insights
A survey reveals that 46% of U.S. hospitals face failure risk within five years, a 3% increase since 1986. This heightened risk affects all hospital sizes, particularly smaller institutions, signaling a major healthcare industry transition.
Area of Science:
- Healthcare Management
- Health Economics
- Hospital Administration
Background:
- The U.S. healthcare industry is undergoing significant structural changes.
- Hospital financial stability is a growing concern.
Purpose of the Study:
- To assess the perceived risk of institutional failure among U.S. hospitals.
- To identify trends in hospital financial risk over time.
Main Methods:
- A survey of U.S. hospitals was conducted by Touche Ross & Co.
- Data was collected and compared from 1986 and 1988.
Main Results:
- 46% of responding hospitals reported being at risk of failure within five years.
- This represents a 3% increase in perceived risk compared to two years prior.
- Hospitals of all bed sizes reported increased risk, with smaller hospitals feeling the most vulnerable.
Conclusions:
- The healthcare sector is entering a period of significant transition.
- The findings suggest a potential restructuring of healthcare delivery.
- Increased financial vulnerability poses a challenge to the sustainability of many U.S. hospitals.