(Financial Failure Prediction in Hospitals: A Practice on Public Hospitals with Logistic Regression Model)

Abstract

Purpose – The purpose of this study is to develop a financial failure prediction model for public hospitals and to determine predicting variables that can explain financial failure in public hospitals the best. Design/methodology/approach – The research was carried out within the scope of 92 public hospitals which operate in the provinces of Istanbul, Ankara and Izmir and whose financial statement data of the years 2014-2016 could be accessed completely. In the research, a categoric dependent variable and 20 independent variables, which were calculated on the basis of three-year data, were used. Study data were analyzed using the Logistic Regression Analysis Method via the SPSS 22.0 package program. Findings – As a result of the logistic regression analysis, a financial failure prediction model which had an adequate model-data compatibility, was developed with 79,3% accurate classification success. In the model developed; it was determined that predicting variables that could explain financial failure the best were Inventory Dependency, Cash Turnover, Inventory /Current Asset, Current Asset/Total Asset and Trade Liability/Total Liability, while predicting variables that increased the prediction rate the most were Stock/Current Asset and Current Asset/Total Asset. Discussion – According to the reserach results, it is necessary to reduce idle current assets and not to keep too many stocks, in order to minimize the possibility of financial failure in public hospitals. In addition, it is necessary to consider elements in the working capital, invest in assets that have a higher fature of turning into cash and shorten the expiration of receivables. Efficient and effective use of asset and resource elements in public hospitals plays an important role in minimizing the possibility of financial failure. The study results substantially show a similarity with the results of previous studies conducted in the relevant literature. Considering that public hospitals in Turkey operate with a lower financial performance; it is important to create an management approach in which financial failure prediction studies that forewarn, are carried out regularly in public hospitals against deteriorations in the financial structure.