Risk of hospital insolvency and its relationship with income and borrowings from banks: a case–control study with large-scale financial data in Japan

Satoshi Tsuboi (), Tomosa Mine and Tetsuhito Fukushima
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Satoshi Tsuboi: Fukushima Medical University
Tomosa Mine: Shokei Gakuin University
Tetsuhito Fukushima: Fukushima Medical University

SN Business & Economics, 2021, vol. 1, issue 11, 1-13

Abstract: Abstract Considering the variety of stakeholders surrounding hospitals, hospital financial distress should be understood as a social issue, rather than just a matter involving the hospital owners. The present study aimed to assess Japanese hospital insolvency and related factors based on a nationwide financial dataset, and to identify indicators of the risk of insolvency. The legal financial reports used included a balance sheet and a profit-and-loss statement of hospitals owned by healthcare corporations, representing about 70% of all Japanese hospitals. This case–control study with descriptive analyses was conducted to clarify the financial status of healthcare corporations and to assess associations between specific factors and insolvency. Insolvency was found in 5.9% of healthcare corporations in 2016. Insolvency was significantly associated with operational income per sales (odds ratio, 0.16), and both short- and long-term borrowings per sales (odds ratios: 1.46 and 1.22 in this order). The present study found that 5.9% of Japanese healthcare corporations were insolvent, and hospital profitability and borrowing (both short- and long-term) could be key factors related to preventing hospital insolvency in Japan. To maintain sustainable healthcare services by hospitals, decision makers should consider the risk of insolvency, and balance the amount of borrowings against sales.

Keywords: Hospital; Financial distress; Hospital insolvency; Hospital management; Financial management; Finance (search for similar items in EconPapers)
JEL-codes: G33 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s43546-021-00153-7

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