AAA Spark Meeting of Regions

Predicting Financial Failure of Public Teaching Hospitals: An Application of Fuzzy Clustering Analysis

• In Event: Predicting Financial Failures and the Coronavirus Pandemic and Corrpution

Abstract

Despite the centrality of financial failure for public teaching hospitals in Turkey, there have been limited numbers of studies exploring underlying factors for failure. This study aims to develop a prediction model for hospital failures and determine the variables that will best predict public teaching hospitals' financial failures. Our sample includes 47 Turkish Ministry of Health (MoH) teaching hospitals from 2012 to 2014. We conducted a Fuzzy C Means clustering analysis using eight financial ratios. We then calculated Hospital Fuzzy Financial Health Scores (HF-FHS) as a financial failure degree through the selected n-cluster model. We also compared The Hospital Fuzzy Financial Health Scores (HF-FHS) with the modified Altman Z scores-a commonly used financial distress measure in the hospital service sector. The results show that public teaching hospitals in financial failure have increased over the years. HF-FHS scores in good or poor financial conditions differ significantly from each other. HF-FHS scores also are strongly correlated with Altman Z scores.

Authors

• Murat Turk, The University of Health Sciences: Gulhane Department of Health Sciences

• nurettin oner, The University of Alabama at Birmingham

• Ferhat Devrim Zengul, The University of Alabama at Birmingham