Current Asset Management and Financing Research Paper

Current Asset Management and Financing - Research Paper Example d patient load affect their day to day operations of hospitals, but other systemic and structural factors outside their realm of control cause major operational limitations. For hospitals in general, rising operational costs and shrinking profit margins have negatively affected the industry. It is estimated that in the U.S. around a third of all hospitals are operating with negative profit margins (Sussman, Jordahl, 2010). Some of the major macroeconomic factors affecting their financial viability are: Outdated and Inefficient Administrative Processes- The lack of computerized payment process systems, manual procedures, repetitive rework of outstanding claims and redundant data collections have all contributed to the diminishing bottom line of most healthcare hospitals. It has been estimated that around 30% of all claims filed by physicians have errors with around 15% of claims disappearing or getting lost in the process. For many hospitals around 80% of their claims are for small secondary payments ($100-$200) which often times go unclaimed or result in lengthy reimbursement delays .The overall complexity of the system also contributes to its operational inefficiency. The need for extra sources of reliable short term capital sources with reasonable terms, costs and risks will increase in the future. Most small hospitals even with excellent credit ratings do not have the access to bank credit that top-tier hospitals enjoy. As a general rule taking advantage of alternative sources of short term operating capital is paramount to their long term viability. Even with the improved operating and liquidity positions of most hospitals, internal capital or operating cash flow alone, will not be enough to sustain the level of growth and capital investment necessary to maintain competitiveness. Philanthropic donations will play an increasing role in the funding of hospitals operations. The investment income can also play a major role in providing operating capital.