A revised classification pattern of hospital financial ratios

Zeller, Thomas L.; Stanko, Brian B.; Cleverley, William O.

doi:10.1016/0278-4254(96)00014-2

Cited by 43 publications

(28 citation statements)

References 8 publications

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“…First, net income divided by total revenue is variably referred to as margin (Coe, 2011;Hager, 2001;Hodge & Piccolo, 2005;Keating et al, 2005;Trussel et al, 2002;Tuckman & Chang, 1991), operating margin (Greenlee & Trussel, 2000), net operating results (Chabotar, 1989), stability (Trussel & Parsons, 2008), sustainability (Ryan & Irvine, 2012), and profitability (Keating & Frumkin, 2001;McLaughlin, 2009;Zeller, Stanko, & Cleverley, 1996). First, net income divided by total revenue is variably referred to as margin (Coe, 2011;Hager, 2001;Hodge & Piccolo, 2005;Keating et al, 2005;Trussel et al, 2002;Tuckman & Chang, 1991), operating margin (Greenlee & Trussel, 2000), net operating results (Chabotar, 1989), stability (Trussel & Parsons, 2008), sustainability (Ryan & Irvine, 2012), and profitability (Keating & Frumkin, 2001;McLaughlin, 2009;Zeller, Stanko, & Cleverley, 1996).…”

Section: Literature Reviewmentioning

confidence: 99%

Why So Many Measures of Nonprofit Financial Performance? Analyzing and Improving the Use of Financial Measures in Nonprofit Research

Prentice

2016

Nonprofit and Voluntary Sector Quarterly

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Financial measures provide an empirical basis from which nonprofit researchers and practicing managers can approximate organizational capacity, financial health, and performance. These measures are used in nonprofit research to predict organizational activities and funding opportunities. Yet, little empirical evidence exists to tell us what these measures assess and whether they capture underlying concepts in the way we assume. Using Internal Revenue Service (IRS) Form 990 data, this article explores the following research question: Can accounting measures be organized into theoretically intuitive and empirically defensible constructs? To answer this question, a literature review of nonprofit financial health studies and textbooks was conducted, and dimension reduction techniques were employed. The findings suggest that the answer to the research question is not as simple as expected, and we should exercise more caution in how we use financial measures in nonprofit research.

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Section: Literature Reviewmentioning

confidence: 99%

Why So Many Measures of Nonprofit Financial Performance? Analyzing and Improving the Use of Financial Measures in Nonprofit Research

Prentice

2016

Nonprofit and Voluntary Sector Quarterly

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“…Hence maximisation of profits is not a key objective and consequently the employment of profitability ratios in the analysis is of limited use. However, profitability ratios (e.g., operating margin, return on assets, return on equity) have been traditionally used in past studies that examined the performance of organisations in the US hospital industry (Chu et al, 1991;Zeller et al, 1996;Watkins, 2000;Eldenburg and Krishnan, 2003;Eldenburg et al, 2004). Basioudis and Ellwood (2005) also examined whether the generation of profits or losses had an impact on audit fees in the UK NHS sector.…”

Section: Variablesmentioning

confidence: 99%

Auditing models for the detection of qualified audit opinions in the UK public services sector

Gaganis¹,

Pasiouras

2006

IJAAPE

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We develop classification models that could assist auditors during the examination of firms operating in the public services sector. The sample consists of 228 firms from the Health and Social work and the Education UK sectors. The models, both sector-specific and general ones, are developed with discriminant and logit analysis through a 10-fold cross-validation procedure. The models achieve a satisfactory accuracy in classifying financial statements as qualified or unqualified. The variables that are important across all models are the logarithm of total assets, the return on capital employed, and whether the auditor is one of the big four or not. Copyright © 2006 Inderscience Enterprises Ltd

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“…The first assumption pertains to how one measures inefficiency within a hospital environment. Within the hospital financial management literature, analysts have traditionally used a small set of ratios drawn from accounting and financial statements either as direct measures of specific aspects of inefficiency or as proxies for a single, composite measure of inefficiency (McCue & Draper, 2004;Watkins, 2000;Zeller, Stanko, & Cleverley, 1996). At the level of the hospital, some of the most commonly used efficiency ratios include the inventory turnover ratio (input use efficiency), the accounts receivable turnover ratio (revenue cycle efficiency), the debt-to-asset ratio (efficiency in leverage), the current ratio (efficient liquidity levels), uncompensated care ratios (community service efficiency), and operating margins (profitability).…”

Section: Initial Assumptionsmentioning

confidence: 99%

“…Our data contain a number of inputs for each cost center and efficiency ratios, which serve as our outputs, for each hospital. Both inputs and outputs were identified based on data availability and consistency with the literature (McCue & Draper, 2004;Watkins, 2000;Zeller et al, 1996). Descriptive statistics for each of these variables are available in Table 3.…”

Section: Smentioning

confidence: 99%

Measuring Shared Inefficiency Between Hospital Cost Centers

et al. 2010

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In this article, a combination of data envelopment analysis, spreadsheet modeling and regression techniques is applied to a panel of nonprofit Washington State hospitals in an effort to determine whether (and if so, to what extent) inefficiency in one hospital cost center is shared with inefficiency in other cost centers. The findings suggest that a significant amount of inefficiency is shared across hospital cost centers. The authors further determine that certain cost centers contribute more to the overall performance of a given hospital than others. As such, managerial decisions and government policies designed to enhance hospital efficiency should be implemented differently, depending on the characteristics of the hospital in question.

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A revised classification pattern of hospital financial ratios

Cited by 43 publications

References 8 publications

Why So Many Measures of Nonprofit Financial Performance? Analyzing and Improving the Use of Financial Measures in Nonprofit Research

Why So Many Measures of Nonprofit Financial Performance? Analyzing and Improving the Use of Financial Measures in Nonprofit Research

Auditing models for the detection of qualified audit opinions in the UK public services sector

Measuring Shared Inefficiency Between Hospital Cost Centers

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