Profitability Evaluation of Hospital Departments Forming a Health Care Entity

Abstract

IntroductionA healthcare entity is an enterprise with a complex structure, which at a time of system transformation as well as due to the accession of Poland to European Union, must be adapted to the needs of today's medicine. This process should take into account the principles of economic thinking in order to enhance the effectiveness of the use of resources of resource reduce operating costs of entities.The current regulation of the Minister of Health of 02 February 2011 on requirements that should be fulfilled in technical and sanitary terms by premises and equipment of health care entities (Dz. U. Nr 31, poz. 158) enforces the need to implement adjustment programmes and aims at accelerating the desirable restructuring changes of particular health care entities.As a result of hospital restructuring, the supply of short-term healthcare services continues to fall for the benefit of alternative forms. Many patients do not require hospitalization in short-term healthcare departments. Some forms of treatment can be provided in day-care centres or long-term care departments.In most countries of the European Union the use of short-term care beds amounting to 85% is considered a minimum; it is justified on economic and organizational grounds. The aim of restructuring hospitals is to maintain an optimal number of hospitals and short-term care beds with an appropriate structure of services supply , making the optimum use of the existing resources.This aim of the article is to present the results of profitability evaluation of the departments forming the studied healthcare entity from Poland. The primary aim of properly operating healthcare entities is to strive to obtain more efficient and flexible structures of hospitals to provide comprehensive medical services, including diagnostics, treatment as well as early rehabilitation, as they allow to for a return quickly to work and regain a better quality of life.1. Methodology of the ResearchThe analysis of profitability of the health care entity was carried out by applying comparative analysis and descriptive statistics, evaluating the sales, variable costs of treatment and the fixed costs (Dakin et al., 2015).The specificity of the services provided by the health care facility to evaluate the efficiency it is necessary to use the description of allowing for evaluation of the studied phenomenon (qualitative assessment). While quantitative measures do not take into account the diversity of the quality or effectiveness of medical services (Jacobs et al., 2013).The key contribution of productivity analysis models to measuring efficiency is: (a) to adjust for the external environmental influence on performance, and (b) to handle to problem of attaching relative valuations to diverse outputs. Two approaches have dominated the productivity literature: econometric methods, pre-eminently various forms of statistical methods such as stochastic frontier analysis (SFA); an descriptive methods, knowns as data envelopment analysis (DEA) (Jacobs et al., 2006). Although these methods are approaching the task in very different fasions have a common intention to use obsereved behavior of all organizations to apply the maximum possible level of performance (production function) and providing estimates of the degree of risk the functioning of the audited entity (Papanicolas, Smith, 2013).The value of the sales was compared with the variable costs and the fixed costs in order to evaluate profitability of the departments forming the health care entity. Positive surplus indicates a positive financial result, in economics defined as a profit, i.e. profitability of the studied health care entity. A negative difference between the sales, variable costs and the fixed costs indicates that the entity generates a negative financial result, defined as a loss, i.e. the lack of profitability (Hamrol, 2004). A financial result reflects a financial picture of the overall results obtained by a company in a particular period of time. …