Rural Versus Urban Hospitals In Poland: A Financial Health Assessment Case Study

Abstract:

Literature studies suggest that hospitals in rural areas are usually smaller and more sensitive to changes in health policies. The aim of this research is to assess and compare the financial condition of rural and urban hospitals. Basing on literature studies, we have assumed that rural hospitals are characterized by lower profitability, higher debt and lower overall financial condition. We have proved, that rural hospital, although smaller, have lower debt ratios and better financial condition (especially in terms of profitability and liquidity). We have applied statistical tool and authorial methodology (“The M Method”), which basis on synthetic indicators of financial condition.

In Poland, local authorities, at the level of regions (NUTS 2) and counties (NUTS 3), are responsible for ensuring access to stationary health care, mostly through hospitals’ ownership (Bem, 2013). The private sector plays only complementary role, especially in the case of hospital care. Because hospitals in Poland are, generally, still public entities, it’s situation is strongly affected by, potentially difficult, financial situation of the local authorities, which is less favourable in the case of county’s local authorities. That is why, they were often transformed into companies or managed by private operators. The aim of such action is to cut down the potential financial responsibility for hospital’s financial condition.

Hospitals in rural areas are usually smaller and sensitive to changes in health policies (e.g. rules of financing, requirements concerning qualification of medical staff), and, at the same time, play a huge role in meeting the needs of local communities (Moscovice & Stensland, 2002), (Michalski, 2009), (Michalski, 2015), as the central part of the local health infrastructure (Kenny & Duckett, 2004), (Michalski, 2014), because their support mainly local patients (Ona & Davis, 2011).

In recent years many European countries have implemented market-driven reforms to improve the efficiency and quality of hospital services. Some of them resulted in the closure of hospitals, characterised by poorer financial performance, especially rural ones (Garcia-Lacalle & Martin, 2010), (Brozyna et al. 2016), (Michalski, 2015a), (Michalski, 2016). Such hospitals - small, rural, vulnerable financially – usually require special support, through the different rules of payment for benefits (Nedelea & Fannin, 2013), (Rosko & Mutter, 2010).

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