FINANCIAL PERFORMANCE OF COUNCIL DESIGNATED HOSPITALS (CDHS) AND VOLUNTEERING AGENCY HOSPITALS (VAHS) IN TANZANIA
Keywords:
Financial Performance, Council Designated Hospitals, Volunteering Agency Hospitals, TanzaniaAbstract
The primary objective of this paper is to analyze the financial performance of council designated hospitals (CDHs) and volunteering agency hospitals (VAHs) in Tanzania. Specifically, the study involves analysis of financial performance of the two categories of hospitals based on operating margin, growth rate in equity, current ratios, days cash on hand, equity financing and average age of plant during 2011/12 - 2014/15. Ratio analysis technique was employed in analyzing financial performance of the two categories. Data were extracted from respective hospitals’ annual reports and collected using the stratified sampling procedure whereby Lake, Eastern, Western, Southern and Northern Zone were treated as stratum. The aim of using stratified sampling aimed at obtaining representation of the total population (90 faith based private hospitals) in the country. Result revealed that Hospitals in both categories have good liquidity position, evidenced by current ratios which is above the required benchmark of 2.0 times, as well as reasonably average days cash on hand (DCH) of at least 20 days. However, CDHs seems to outperform the VAHs in terms of liquidity over the sampled period. As far as the operating margin is concerned both categories were not performing well, since they all have negative or almost zero operating margin. Result on growth rate in equity indicates that both categories have zero or less than one percent growth in equity which is very marginal. Average age of plant was higher in VAHs category compared to their CDHs counterpart. Since both categories are not performing quite well in many aspects (such as profitability, equity financing, and growth rate in equity) the study recommends that administrators should ensure stability in liquidity. Good performance in liquidity and zero leverage make the hospitals safer (less risk) as far as solvency and financial condition is concernedReferences
Aulakh,P Masaaki, P and Hildy, T(2000) Export Strategic and Performance of Firm from Emerging Economies: Evidence from Brazil, Chile and Mexico, Academy of Management Journal, 43(3), 342-61
Bhat, R and Jain, N. (2006). Financial Performance of Private Hospitals In India: Some Further Evidence Research and Publications, Working Paper No 2006-04
Bwana ,K (2015) Measuring-Technical Efficiency of Faith-Based Hospitals in Tanzania: An application of DEA; Journal of Research in Applied Economics, Vol 7(1) pp1 -12.
Bwana, K (2018) Investigating Efficiency Based on The Hospitals Size: An Application of A Non-Parametric Approach To The Private Hospitals In Tanzania: African Journal of Applied Research Vol. 4, No. 1 ), pp. 106-119
Bwana, K (2018(b)) Impact of Public Private Partnerships (PPPs) on financial Performance of Council Designated Hospitals in Tanzania; African Journal of Applied Research Vol. 4, No. 1
Chu, D., Zollinger, T., Kelley, W and Sayawell, RM, Spring Jr. (1991). An empirical analysis of cash flows, working capital and the stability of financial ratios groups in the hospitals industry, Journal of Accounting and Public Policy 10, pp 39 – 58.
Cleverley, W.O (1993). The 1993 Almanac of Hospitals Financial and Operating Indicators, The Center for the Health Care Industry Performance Studies; Columbus, OH.
Cleverley, W. O., & Nilsen, K. (1980). Assessing Financial Position with 29 Key Ratios. Hospital Financial Management, 34(1), 30.
Glandon, G., Counte M, Holloman, K and Kowalezyk, J. (1987). An analytical Review of Hospitals Financial Performance Measures. Health and health Services Administration 32(4): 4939-455.
Kane Consulting Group. (2008). Report on the Financial Conditions of the 23rd. Acute Non- profit New Hampshire Hospitals.
McCue, M.J and Nayar, P. (2009). A Financial Rate Analysis of for Profit and Non-Profit Rural Referral Centers, the Journal of Rural Health, RHA.
MOHSW (2008) , Report on medicine coverage and health insurance program survey in Tanzania
MoHSW. (2011); Health Sector and Social Welfare Public Private Partnerships Policy Guidelines. Available at: www.moh.go.tz.
Palepu,K.&P.Healy(2008).Businessanalysisandvaluation:Usingfinancialstatements.4th edition.Mason,OH:ThomsonSouth-western
Pink, GH. Brown, AD., Daniel, I., Hamlette, ML. Markel, F., McGallis, H and McGillop. (2006). Financial Benchmarks for Ontario Hospitals, Health Quarterly 9(1) 40 – 45.
Pink, GH. Daniel, I., McGill, L and McKillop, I. (2007). Selection of Key Financial Indicators; A literature, Panel and Survey Approach, Healthcare Quarterly, Vol 10 (1) pp 87–98.
Pink, GH. Daniel, I., McGills, L and McKillop, I. (2007). Selection of Key Financial Indicators; A literature, Panel and Survey Approach, Healthcare Quarterly, Vol 10 (1) pp 87–98.
Pink, GH. Holmes, GM., Slifkin, RT and Thompson, RE. (2009). Developing Financial Benchmarks for Critical Access Hospitals, Health care Financing, Vol 30 (3) pp55 – 69.
Watkins, A.L. (2000). Hospitals Financial Ratio Classification Patterns Revisited: Upon Considering Non- Financial Information, Journal of Accounting and Public Policy, Vol 19, pp 73 – 95.
Zeller, T.L, Stanko, B.B, Cleverley, W.O. (1996). A Revised Classification Pattern of Hospitals Financial Ratios. Journal of Accounting and Public Policy.15 (2), 161-182
