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A strategy for enhancing financial performance: A study of general acute care hospitals in south Korea

Authors
Choi, M.Lee, K.-H.
Issue Date
2008
Keywords
Financial performance; Hospital; Profitability; South Korea; Strategy
Citation
Health Care Manager, v.27, no.4, pp.288 - 297
Indexed
SCOPUS
Journal Title
Health Care Manager
Volume
27
Number
4
Start Page
288
End Page
297
URI
https://scholar.korea.ac.kr/handle/2021.sw.korea/125333
DOI
10.1097/HCM.0b013e31818c806e
ISSN
1525-5794
Abstract
In this study, the determinants of hospital profitability were evaluated using a sample of 142 hospitals that had undergone hospital standardization inspections by the South Korea Hospital Association over the 4-year period from 1998 to 2001. The measures of profitability used as dependent variables in this study were pretax return on assets, after-tax return on assets, basic earning power, pretax operating margin, and after-tax operating margin. Among those determinants, it was found that ownership type, teaching status, inventory turnover, and the average charge per adjusted inpatient day positively and statistically significantly affected all 5 of these profitability measures. However, the labor expenses per adjusted inpatient day and administrative expenses per adjusted inpatient day negatively and statistically significantly affected all 5 profitability measures. The debt ratio negatively and statistically significantly affected all 5 profitability measures, with the exception of basic earning power. None of the market factors assessed were shown to significantly affect profitability. In conclusion, the results of this study suggest that the profitability of hospitals can be improved despite deteriorating external environmental conditions by facilitating the formation of sound financial structures with optimal capital supplies, optimizing the management of total assets with special emphasis placed on inventory management, and introducing efficient control of fixed costs including labor and administrative expenses. © 2008 Lippincott Williams & Wilkins.
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