Financial Management Practices and Financial Sustainability in Mission Hospitals, Kiambu County, Kenya

Abstract

Purpose: The study aimed to examine the role of financial management practices in the financial sustainability of mission hospitals in Kiambu County, Kenya. It seeks to understand how financial planning, funding practices, working capital management, and health sector regulations impact the economic stability and operational viability of these vital healthcare institutions. Methodology: The study utilized a descriptive cross-sectional research design to explore the financial management practices and their impact on the financial sustainability of mission hospitals in Kiambu County, Kenya. Data collected on various financial indicators and management practices were analyzed using the Statistical Package for the Social Sciences (SPSS) version 22. Descriptive statistics such as mean and standard deviation were computed to summarize the financial management practices observed in the hospitals. The findings were presented using tables to display the summary statistics and charts and graphs to illustrate trends and comparisons across different financial indicators. Additionally, inferential analyses, including Pearson correlation and multiple linear regression, were conducted to assess relationships between variables and determine the predictors influencing the financial sustainability of the hospitals. Findings: The study achieved an 89.6% response rate, revealing a predominantly male (53.4%) and mature workforce, with most respondents aged 31–40 and over 51. Significant positive relationships were found between financial sustainability and financial planning and control practices (β1 = 0.241, p = 0.003), financing and funding practices (β2 = 0.231, p = 0.002), and working capital management practices (β3 = 0.332, p = 0.000). Financial management practices explained 39.2% of the variation in financial sustainability. Health sector regulations significantly moderated the relationship between financial planning and control practices and financial sustainability (β4a = -0.215, p = 0.035), but had no significant moderating effect on financing or working capital management practices. Unique Contribution to Theory, Practice and Policy: The study findings align with several financial theories, providing valuable insights into financial management practices in mission hospitals. They support the Pecking Order Theory by highlighting the prioritization of internal financing to maintain autonomy and minimize information asymmetry. Additionally, the findings contribute to the Cash Conversion Cycle Theory, emphasizing the role of efficient working capital management in enhancing liquidity and reducing the need for external financing. Moreover, the research supports contingency theory by underscoring the influence of financial management practices on financial sustainability and advocating for tailored financial strategies in mission hospitals. The study also contributes to the theory of budgeting by stressing the importance of systematic budgeting in financial decision-making for resource allocation and financial stability. These insights offer valuable guidance for both policymakers and practitioners in mission hospitals, informing policy decisions and providing practical recommendations to enhance financial management practices and achieve greater financial sustainability in these healthcare institutions.