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KMID : 0371019980310030490
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Journal of Preventive Medicine and Public Health
1998 Volume.31 No. 3 p.490 ~ p.502
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Predicting hospital bankruptcy in Korea
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Lee Moo-Sik
Seo Young-Joon
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Abstract
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This study purports to find the predictor of hospital bankruptcy in Korea and to examine the predictive power of the discriminant function model of hospital bankruptcy. Data on 17 financial and 4 non-financial indicators of 31 bankrupt and 31 profitable hospitals of 1, 2, and 3 years before bankruptcy were obtained from the hospital performance databank of Korea Institute of Health Services Management. Significant variables were identified through mean comparison of each indicator between bankrupt and profitable hospitals, and the discriminant function model of hospital bankruptcy was developed.
The major findings are as follows :
1. As for profitability indicators, net worth to total assets, operating profit to total capital, operating profit ratio to gross revenues, normal profit to total assets, normal profit to gross revenues, net profit to total assets were significantly different in mean comparison test in 1, 2, and 3 years before hospital bankruptcy. With regard to liquidity indicators, current ratio and quick ratio were signifiant in 1 year before bankruptcy. For activity indicators, patients receivable turnover was significant in 2 and 3 years before bankruptcy and added value per adjusted inpatient days was significant in 3 years before bankruptcy.
2. The discriminant function in 1, 2, and 3 years before bankruptcy were;
Z=-0.0166×quick ratio - 0.1356×normal profit to total assets - 1.545×total assets turnarounds in 1 year before bankruptcy, Z=-0.0119×quick ratio - 0.1433×operating profit to total assets - 0.0227×value added to total assets in 2 years before bankruptcy, and Z=-0.3533×net profit to total assets - 0.1336×patients receivables turnrounds - 0.04301×added value per adjusted patient + 0.00119×average daily inpatient census in 3 years before bankruptcy.
3. The discriminant function´s discriminant power in 1, 2, and 3 years before bankruptcy was 77.42, 79.03, 82.25% respectively.
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KEYWORD
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the predictor of hospital bankruptcy, financial and non-financial index, the discriminant function model
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