This study investigated the financial performance of Korean Medicine hospitals in Korea in order to understand the current status of hospital management and improve its efficiency.
Methods
Financial statements of 24 medical corporations, 19 juridical foundations and 18 school hospitals from 2016 to 2018 were obtained from the secondary data published by the Health Insurance Review and Assessment Service, the National Tax Service and the Korea Advancing Schools Foundation. Financial performance was measured on 6 dimensions: liquidity, profitability, activity, growth, cost and productivity (investment efficiency) by analyzing 8 financial indicators: Liability to Total Assets, Net Profit to Patient Service Revenues, Total Assets Turnover, Growth Rate of Patient Service Revenues, Operating Expenses to Patient Service Revenues, Value Added to Patient Service Revenues, Value Added to Total Assets, and Value Added to Personnel Expenses.
Results
Korean Medicine hospitals showed lower Liability to Total Assets, Liquidity and Value Added to Total Assets than Western Medicine hospitals did. They also showed higher Value Added to Patient Service Revenues and Value Added to Personnel Expenses than Western Medicine hospitals did. The net profit decreased significantly (−50.8%) in 2018 whereas Patient Service Revenues increased (6.9%) for the same period due to Operating Expenses increase and Non-Operating loss.
Conclusions
These findings suggest that the Korean Medicine hospital sector in Korea needs to improve liquidity and financial structure and to enhance profitability by reducing Personnel Expenses and generating Non-operating revenues in order to improve its investment efficiency and competitiveness.
(Current Liabilities + Non-Current Liabilities) ÷ Total Assets × 100
2. Profitability
Net Profit to Patient Service Revenues
Net Profit ÷ Patient Service Revenues × 100
3. Activity
Total Assets Turnover
Patient Service Revenues ÷ Total Assets
4. Growth
Growth Rate of Patient Service Revenues
(Patient Service Revenues of This Year - Patient Service Revenues of Previous Year) ÷ Patient Service Revenues of Previous Year × 100
5. Cost
Operating Expenses to Patient Service Revenues
Operating Expenses ÷ Patient Service Revenues × 100
Investment Efficiency Analysis
Value Added
Patient Service Revenues – (Material Expenses + Stationaries + Power Utilities + Outsourcing)
Value Added to Patient Service Revenues
Value Added ÷ Patient Service Revenues × 100
Value Added to Total Assets
Value Added ÷ Total Assets × 100
Value Added to Personnel Expenses
Value Added ÷ Salaries × 100
Table 2
Characteristics of Analyzed Korean Medicine Hospitals
(Unit: Number of Hospitals)
Number of Beds
160+
120~159
80~119
40~79
0~40
Region
Metropolitans
28
-
2
9
9
8
Other Cities
32
-
-
12
16
4
Rural Area
1
-
-
-
1
-
Total
61
-
2
21
26
12
Ownership
Government
-
-
-
-
-
-
Consumer Cooperative
-
-
-
-
-
-
School Foundation
18
-
1
10
7
-
Juridical Foundation
19
-
1
6
8
4
Medical Corporation
24
-
-
5
11
8
Individual
-
-
-
-
-
-
Total
61
-
2
21
26
12
Table 3
Balance Sheet of Korean Medicine Hospitals (per 100 beds, Fiscal Year 2018)
(Unit: Korean million won)
Total Average
Medical Corporation
Juridical Foundation
School Foundation
p-Value
Number of Hospitals (Beds)
61(4,256)
24(1,340)
19(1,316)
18(1,600)
I. Current Assets
2,615
(21.9%)
3,865
(22.2%)
1,715
(22.9%)
1,900
(20.1%)
0.030
1. Quick Assets
2,541
(21.2%)
3,785
(21.8%)
1,714
(22.9%)
1,758
(18.6%)
0.029
2. Inventory Assets
74
(0.7%)
80
(0.5%)
1
(0.0%)
142
(1.5%)
0.000
II. Non-Current Assets
9,347
(78.1%)
13,531
(77.8%)
5,778
(77.1%)
7,535
(79.9%)
0.002
1. Investment
775
(6.5%)
1,195
(6.9%)
942
(12.6%)
40
(0.4%)
0.000
2. Tangible Assets
8,453
(70.7%)
12,298
(70.7%)
4,512
(60.2%)
7,486
(79.3%)
0.004
3. Intangible Assets
51
(0.4%)
38
(0.2%)
106
(1.4%)
9
(0.1%)
0.000
4. Other Non-Current Assets
68
(0.6%)
218
(2.9%)
0.000
Total Assets
11,962
(100.0%)
17,396
(100.0%)
7,493
(100.0%)
9,435
(100.0%)
0.001
I. Total Liabilities
6,521
(54.5%)
9,658
(55.5%)
5,229
(69.8%)
3,703
(39.2%)
0.000
1. Current Liabilities
3,706
(31.0%)
5,036
(28.9%)
4,723
(63.0%)
860
(9.1%)
0.000
2. Non-Current Liabilities
1,986
(16.6%)
4,182
(24.0%)
499
(6.7%)
627
(6.6%)
0.002
3. Reserve Fund for Essential Business
196
(1.6%)
11
(0.1%)
7
(0.1%)
641
(6.8%)
0.000
4. Medical Development Provisions
633
(5.3%)
429
(2.5%)
-
1,575
(16.7%)
0.017
II. Net Assets
5,441
(45.5%)
7,738
(44.5%)
2,264
(30.2%)
5,732
(60.8%)
0.000
Total Liabilities and Net Assets
11,962
(100.0%)
17,396
(100.0%)
7,493
(100.0%)
9,435
(100.0%)
0.001
Table 4
Income Statement of Korean Medicine Hospitals (per 100 beds, Fiscal Year 2018)
(Unit: Korean million won)
Total Average
Medical Corporation
Juridical Foundation
School Foundation
p-Value
Number of Hospitals (Beds)
61(4,256)
24(1,340)
19(1,316)
18(1,600)
I. Patient Service Revenues
12,425
(100.0%)
10,577
(100.0%)
19,412
(100.0%)
7,515
(100.0%)
0.000
II. Operating Expenses
12,076
(97.2%)
10,330
(97.7%)
18,970
(97.7%)
7,127
(94.8%)
0.000
1. Personnel Expenses
6,188
(49.8%)
6,217
(58.8%)
8,095
(41.7%)
4,135
(55.0%)
0.003
2. Material Expenses
786
(6.3%)
663
(6.3%)
534
(2.8%)
1,216
(16.2%)
0.000
3. Administrative Expenses
5,102
(41.1%)
3,450
(32.6%)
10,341
(53.3%)
1,776
(23.6%)
0.000
III. Operating Income
349
(2.8%)
247
(2.3%)
442
(2.3%)
388
(5.2%)
0.087
IV. Non-Operating Revenues
218
(1.8%)
150
(1.4%)
68
(0.4%)
468
(6.2%)
0.211
V. Non-Operating Expenses
346
(2.8%)
361
(3.4%)
279
(1.4%)
397
(5.3%)
0.911
VI. Income before Income Taxes
221
(1.8%)
36
(0.3%)
231
(1.2%)
459
(6.1%)
0.553
VII. Income Taxes
44
(0.4%)
60
(0.6%)
67
(0.3%)
-
0.000
VIII. Net Profit before Reserve Fund
177
(1.4%)
−24
(−0.2%)
164
(0.8%)
459
(6.1%)
0.322
IX. Transfer/Return to Reserve Fund
−246
(−2.0%)
−17
(−0.2%)
-
−812
(−10.8%)
0.035
X. Net Profit
−69
(−0.6%)
−41
(−0.4%)
164
(0.8%)
−353
(−4.7%)
0.035
* Note: I – II (1+2+3) = III, III + IV – V = VI, VI – VII = VIII, VIII +/− IX = X
Table 5
Financial Ratio Analysis of Korean Medicine Hospitals (Fiscal Year 2018)
Financial Ratios
Total Average
Medical Corporation
Juridical Foundation
School Foundation
p-Value
Number of Hospitals (Beds)
61(4,256)
24(1,340)
19(1,316)
18(1,600)
1. Liquidity
Liability to Total Assets (%)
49.7
54.7
67.7
24.0
0.000
2. Profitability
Net Profit to Patient Service Revenues (%)
1.6
−0.3
0.9
5.0
0.346
3. Activity
Total Assets Turnover (Times)
1.3
0.7
2.6
1.0
0.000
4. Growth
Growth Rate of Patient Service Revenues (%)
5.4
3.0
12.4
1.2
0.001
5. Cost
Operating Expenses to Patient Service Revenues (%)
97.5
98.5
97.8
95.9
0.615
-.Personnel Expenses
52.8
59.6
42.4
54.6
0.000
- Material Expenses
8.4
6.5
2.9
16.7
0.000
- Administrative Expenses
36.4
32.4
52.5
24.6
0.000
Table 6
Investment Efficiency Analysis of Korean Medicine Hospitals (Fiscal Year 2018)
Financial Indicators
Total Average
Medical Corporation
Juridical Foundation
School Foundation
p-Value
Number of Hospitals (Beds)
61(4,256)
24(1,340)
19(1,316)
18(1,600)
Productivity and Efficiency
Value Added to Patient Service Revenues (%)
76.9
87.7
64.0
76.0
0.000
Value Added to Total Assets (%)
94.0
56.8
161.5
72.5
0.000
Value Added to Personnel Expenses (%)
148.9
151.9
150.7
142.9
0.252
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