Korea Journal of Hospital Management (한국병원경영학회지)

Korean Society of Hospital Management (한국병원경영학회)
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The Effects of Independent External Financial Audit on Uncompensated Care Provision

독립 외부 회계 감사가 병원 미보상 진료 공급에 미치는 영향: 미국 캘리포니아 병원 데이터를 중심으로

  • Received : 2016.09.28
  • Accepted : 2017.03.10
  • Published : 2017.06.30
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Abstract

1) Purpose: The goal of this study is to examine the association between independent external financial audits and uncompensated care. Not-for-profit hospitals are required to provide uncompensated care in return for tax exemption. These tax exemption benefits are applied to all activities that contribute to the enhancement of uncompensated care. However, some researchers argue not-for-profit hospitals do not provide uncompensated care as expected by their tax exemption. Thus, this paper examines whether independent external financial audits can help the not-for-profit hospitals to function as designed and ultimately for meeting the objectives of the not-for-profit organization, which are the clearest examples of charitable activities performed by not-for-profit hospitals. 2) Methodology: Panel data analysis was utilized with fixed effect using California hospital financial data from 2002 to 2011. 3) Findings: We found that hospitals receiving independent external financial audits provide more uncompensated care than their counterparts which do not receive audits. 4) Practical Implications: Not-for-profit hospitals provide uncompensated care to people in welfare blind spots. Therefore, they fulfill what governments cannot afford, and play a social role as a ʻnonprofitʼ organization with independent external financial audits.

Keywords

References

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