• The Korean Journal of Health Service Management
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• v.4 no.1
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• pp.99-110
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• 2010

The purpose of this study is to analyze the internal factors that influence the performance of local government hospitals in Korea. Out of 34 Local Government hospitals, 6 hospitals were selected as sample hospitals. Then hospitals were divided into two groups(3 hospitals each), one of which was profit-making and the other loss-making. The criteria in selecting profit or loss-making hospitals was Normal Profit to Total Assets. The major findings of this study were as follows : The headcount per 100 bed of the profit-making hospitals was 8.8 persons less than the loss-making hospitals and the ratio of payroll expenses to total revenue 14.7% less. Inpatient bed occupancy ratio of the profit-making hospitals was 92.8%. This result is higher 21.8% than loss-making hospitals.

• The Korean Journal of Health Service Management
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• v.4 no.1
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• pp.145-156
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• 2010

The purpose of this study is one of high price medical equipment wished to grasp propriety factor about the MRI introduction, analyzing payability through cost accounting into compensation. It was investigated from January 1 to December 31, 2007 about the MRI of a General Hospital. Expectation availability was 23.2 cases, but actual availability did achievement more than 196.1% with 45.5 items. It is estimated that there are a lot of occurrence cases because great reasons that actual availability increases more than expectation availability is excellent resolving power than a CT, and is device that prefer to reason back that radiation damage is less in person body. The followings show the main results of this study. 1. The MRI was construed in order of cost accounting, wave and personnel expenses 45.4%, administrative expenses 53.0%, and material costs 1.6%. 2. According to CVP (Cost-volume-profit) analysis, BEP (Break Even Point) profit is 173,931,428 won for 11 months, and break even usage number of items are 37.5 cases, and separation usage number of items were confirmed by 1.4 cases. Therefore, was construed that can achieve BEP within 11 months though usage number of items keeps 1.4 items day to create the MRI's hospital operation profit. 3. Estimated limit profitability appears high by 96.7%, exceed fixed charges even if when is non-benefit and when it is benefit consider variable, is judged that the MRI's addition induction helps in hospital management enhancing earning rates.

• The Journal of the Korea Contents Association
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• v.14 no.1
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• pp.318-325
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• 2014

The aim is to analyze a performance evaluation of local governmental public hospitals. Data were collected from public disclosure system DB of National Tax Service on 15 July 2013. Twenty-two income statements of local governmental public hospitals were analyzed using descriptive statistic analysis. The analyzing factors were medical operating profit, contribution margin, and trend of operating profit. The important result was that the medical operating profit was negative, average medical operating profit was -4,678.9 million won. However, the contribution margin was positive in all local governmental public hospitals, and average contribution margin was 12,572.5 million won. The trend of operating profit was positive in 15 local governmental public hospitals between 2011 and 2012. The average increased operating profit was 1,299.1 million won. Through this result, we suggest that not only individual public health hospital perspective, but also the enterprise wide perspective like nation was significantly considered to make decision of closure or maintain of local governmental public hospitals.

• Health Policy and Management
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• v.33 no.1
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• pp.55-64
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• 2023

Background: Despite the various activities of the regional public hospitals, discussions are being made as to whether or not to continue due to the issue of financial deficit. Therefore, the main factors affecting the fiscal deficit were analyzed with 10-year data. Methods: This study is a panel analysis that analyzed the characteristics of 34 regional public hospitals and influencing factors on medical benefits for 10 years from 2010 to 2019. First, we analyze the determinants of medically vulnerable areas set by the government, analyze the trend of medical profit per 100 beds and medical profit rate from 2010 to 2019, and identify the factors that affect them. Results: Differences in medical profit per 100 beds and medical profit-to-medical profit rate were caused by market share representing regional characteristics, and both indicators improved as the number of outpatients increased. The important influencing variables are the number of doctors and nurses, and both indicators improve when there are specialists, but medical benefits decrease as the number of doctors increases when judged by the number of people per 100 beds. In addition, the number of nurses per 100 beds does not contribute to medical profit and has a negative effect on the medical profit ratio. Conclusion: As only regional characteristics were taken into account for medically vulnerable areas, operational characteristics need to be considered. The greatest impact on the finances of local medical centers is the proper staffing of doctors and nurses, and their efficient arrangement is the most important factor in financial stability.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.4
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• pp.273-285
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• 2022

Using data from a departmental profit and loss management questionnaire survey conducted for a group of hospitals consisting of various establishment entities, this study evaluates the effectiveness of departmental profit and loss management practices, such as break-even analysis, based on objective performance data. The study also examines whether the implementation of departmental profit and loss accounting is still effective in improving profitability in the financial year 2021 and whether the effectiveness of the implementation of departmental profit and loss accounting is robust. This study reconfirmed that the implementation of departmental profit-and-loss accounting has a positive effect on objective financial performance in hospitals and that the effect of improving profitability can be enhanced by implementing it monthly with high frequency and regularity and by using the accounting results more actively. It was also found that the department's implementation of break-even analysis had a positive impact on financial performance, which was enhanced by more active use of the data. Given the current economic climate, a hospital organization's active participation in income statement management, not only for the hospital as a whole but also for each department, would be an effective management activity.

• Journal of Preventive Medicine and Public Health
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• v.31 no.3 s.62
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• pp.490-502
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• 1998

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 significant 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; $Z=-0.0166{\times}quick$ ratio-$0.1356{\times}normal$ profit to total assets-$1.545{\times}total$ assets turnrounds in 1 year before bankruptcy, $Z=-0.0119{\times}quick$ ratio-$0.1433{\times}operating$ profit to total assets-$0.0227{\times}value$ added to total assets in 2 years before bankruptcy, and $Z=-0.3533{\times}net$ profit to total assets-$0.1336{\times}patients$ receivables turn-rounds-$0.04301{\times}added$ value per adjusted $patient+0.00119{\times}average$ 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.

• Korea Journal of Hospital Management
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• v.2 no.1
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• pp.1-21
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• 1997

In order to analyze the shifts in the volume and profits of Computed Tomography(CT) and Magnetic Resonance Imaging(MRI) utilization for a year before and after the implementation of insurance coverage for CT, this study has been undertaken examining CT and MRI cost data from 'Y' University Hospital situated in Seoul, Korea. Following are the results of this study: 1. The medical insurance payment for CT, implemented on January 1, 1996, increased CT utilization from January 1996 to April 1996 due to low insurance premiums: however, from May 1996 the number of CT cases significantly decreased as a result of strengthened medical cost reviews and the new 'Detailed standards for approval of CT' announced near the end of April 1996 by the insurer. 2. Since the implementation of insurance coverage for CT, CT fee reduction rates for reimbursements by the insurer to the hospital were 50% and 40% for January and February, respectively, and 31% and 15% for March and April. A significant point in the lowering of the reduction rate was reached in May at 11%; furthermore, since June the reduction rate fell below the average reduction rate for reimbursements for all procedures. If the 'Detailed standards for approval of CT' had been announced before the implementation of insurance coverage for CT, CT utilization would not have been so high due to the need to meet those 'standards'. In addition, loss of hospital profits resulting from the reduction for reimbursements would not have occurred. 3. The shifts in MRI utilization showed that there was no particular change with the beginning of insurance coverage for CT, and the introduction of the 'Detailed standards for approval of CT' made MRI utilization increase because MRI is free of restrictions imposed by the insurer. 4. The relationship between CT utilization and MRI utilization showed that they were supplementary to each other before insurance coverage for CT, but that CT was substituted for MRI because of strengthened medical cost reviews after t~e beginning of insurance coverage for CT. 5. The shifts in volume by patient characteristics showed that the number of inappropriate case patients, according to the insurer's "Standards for approval", decreased more than the number of appropriate case patients after the introduction of insurance coverage for CT. Therefore, the health insurance fee schemes for CT have influenced patient care. 6. The shifts in profits from CT utilization showed a net profit decrease of 31.6%. In order to match the pre-coverage profit level, 5,471 more cases would need to be seen and productivity would need to be increased by 32.7%. This profit decrease resulted from a decrease of CT utilization and low reimbursements. With insurance coverage, net profits from CT were 24.4%, and a margin of safety ratio was 39.6%. Because of the net profits and margin of safety ratio, CT utilization fees for insured appropriate cases could not be considered inappropriate. 7. The shifts in profits from MRI utilization before and after the introduction of CT coverage showed that in order to match pre-CT coverage profit levels, 2,011 more cases would need to be seen and productivity would need to be increased by 9.2%. The reasons for needing to increase the number of cases and productivity result from cost burdens created by adding new MRI units. But with CT coverage already begun, MRI utilization increased. Combined with a minor increase in the MRI fee schedule, MRI utilization showed a net profit increase of 18.5%. Net profits of 62.8% and a 'margin of safety ratio' of 43.1% for MRI utilization showed that the hospital relied on this non-covered procedure for profits. 8. The shifts in profits from CT and MRI utilization showed the net profits from CT decreased by 2.33billion Won while the net profits from MRI increased by 815.7million Won. Overall, these two together showed a net profit decrease of 1.51billion Won. The shifts in utilization showed a functional substitutionary relationship, but the shifts in profits did not show a substitutionary relationship. From these results, We can conclude that if insurance is to be expanded to include previously uncovered procedures using expensive medical equipment, detailed standards should be prepared in advance. The decrease in profits from the shifts in coverage and changes in fees is a difficult burden that should be shared, not carried by the hospital alone. Also, a new or improved fee schedule system should include revised standards between items listed and the appropriateness of the fee schedule should constantly be ensured. This study focused on one university hospital in Seoul and is therefore limited in general applicability. But it is valuable for considering current issues and problems, such as the influence of CT coverage on hospital management. Future studies will hopefully expand the scope of the issues considered here.

• The Journal of the Korea Contents Association
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• v.12 no.8
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• pp.207-214
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• 2012

The purpose of this study was to review the agreement and disagreement logics on privatization of health care to bring quality enhancement of medical service and alienated area without medical services at the same time, to identify the core keywords through language network analysis a kind of contents analysis on the editorials dealing with privatization of health care and hospitals for profit published on the major daily newspapers for the recent three years, and to find out what is the core of the controversy through the connection centrality analysis of core keywords. Conclusively, it was found from the centrality analysis that "medical service," "hospital," "privatization," "privatization of health care," "hospital for profit" and "Government" were situated in the center of the controversy. It is natural that keywords such as "medical service," "hospital," "privatization," "privatization of health care"and "hospital for profit" were located in the center because this study reviewed the editorials published on major newspapers for the recent three years regarding the privatization of health care or hospital for profit. Next important keywords (words) were "people," "health"and "health insurance." It shows that privatization of health care was not simply seen as the opening of medical service market but as an important issue related to health of people and health Insurance. Next words with high centrality were "objection" and "allowance." Through the contents analysis of editorials for the last three years, it was found that the opinions for and against the privatization were equally matched according to the centrality analysis result. On the other hand, there is one noticeable result in centrality analysis, which is the keywords such as "US," "Korea US" and "FTA" showed centrality to some extent. It shows privatization is handled relating US and Korea US FTA by editorials.

• Health Policy and Management
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• v.20 no.3
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• pp.123-137
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• 2010

The main purpose of this article is for deriving functions related to the prediction of the closure of the hospitals, and finding out how the discriminant functions affect the closure of the hospitals. Empirical data were collected from 3 years financial statements of 41 private hospitals closed down from 2000 till 2006 and 62 private hospitals in business till now. As a result, the functions related to the prediction of the closure of the private hospital are 4 indices: Return on Assets, Operating Margin, Normal Profit Total Assets, Interest expenses to Total borrowings and bonds payable. From these discriminant functions predicting the closure, I found that the profitability indices - Return on Assets, Operating Margin, Normal Profit Total Assets - are the significant affecting factors. The discriminant functions predicting the closure of the group of the hospitals, 3 years before the closure were Normal Profit to Gross Revenues, Total borrowings and bonds payable to total assets, Total Assets Turnover, Total borrowings and bonds payable to Revenues, Interest expenses to Total borrowings and bonds payable and among them Normal Profit to Gross Revenues, Total borrowings and bonds payable to total assets, Total Assets Turnover, Total borrowings and bonds payable to Revenues are the significant affecting factors. However 2 years before the closure, the discriminant functions predicting the closure of the hospital were Interest expenses to Total borrowings and bonds payable and it was the significant affecting factor. And, one year before the closure, the discriminant functions predicting the closure were Total Assets Turnover, Fixed Assets Turnover, Growth Rate of Total Assets, Growth Rate of Revenues, Interest expenses to Revenues, Interest expenses to Total borrowings and bonds payable. Among them, Total Assets Turnover, Growth Rate of Revenues, Interest expenses to Revenues were the significant affecting factors.

• Health Policy and Management
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• v.18 no.2
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• pp.19-38
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• 2008

Financial ratios are key indicators of an organization's financial and business conditions. Among various financial indicators, profitability, financial structure, financial activity and liquidity ratios are frequently used and analyzed. Using the structural equation modeling(SEM) technique, this study examines the structural causal relationships among key financial indicators. Data for this study are taken from complete financial statements from 142 hospitals that passed the standardization audit undertaken by the Korean Hospital Association from 1998 to 2001 for the purpose of accrediting teaching hospitals. In order to improve comparability, ratio values are standardized using the Blom's normal distribution. The final model of the SEM has four latent constructs: financial activity(total asset turnover, fixed asset turnover), liquidity(current ratio, quick ratio, collection period), financial structure(total debt to equity, long-term debt to equity, fixed assets to fund balance), and profitability(return on assets, normal profit to total assets, operating margin to gross revenue, normal profit to gross revenue). While examining several model fit indices(Chi-square (df) = 178.661 (40), likelihood ratio=4.467, RMR=.11, GFI=.849, RMSEA=.157), the final SEM we employed shows a relatively good fit. After examining the path coefficient of the constructs, the financial structure of the hospital affects the hospital's profitability in a statistically significant way. A hospital which utilizes its liabilities, more specifically fixed liabilities, and makes a stable investment decision for fixed assets was found to have a higher profitability than other hospitals. Then, the standard path coefficients were examined to directly compare the influence of variables. It was found that there were no statistically significant path coefficients among constructs. When it comes to variables, however, statistically significant relationships were found. between. financial activity and. fixed. asset turnover, and between profitability and normal profit to gross revenue. These results show that the observed variables of fixed asset turnover and normal profit to gross revenue can be used as indicators representing financial activity and profitability.