Financial Health of Private Hospitals in India

Hospitals are an important component of the healthcare delivery system. Over the years, India has experienced a significant increase in the number iof hospital beds to meet the growing health demands of its poopulalation. Most of this growth has been experienced in the small sized private hospital sector (popularly known as nursing homes in India). The corporate hospital sector, however has not exhibited similar growth though private expenditures on medical and health care in real terms have grown at 10 per cent per annum. This experience has something to do with the financial health and risks, as these are critical determinants in attracting private capital. Using the financial balance sheets and profit and loss accounts data of 128 hsopitals in India, this paper examines the financial health of hsopitals in the private sector. Based on 26 key financial ratios, the paper empirically identifies relevant dimensions of financial health of hospitals.