The main purpose of this article is for deriving functions related to the
prediction of the closure of the hospitals, and finding out how the
discriminant functions affect the closure of the hospitals. Empirical data
were collected from 3 years financial statements of 41 private hospitals
closed down from 2000 till 2006 and 62 private hospitals in business till
now.
As a result, the functions related to the prediction of the closure of the
private hospital are 4 indices: Return on Assets, Operating Margin, Normal
Profit Total Assets, Interest expenses to Total borrowings and bonds
payable. From these discriminant functions predicting the closure, I found
that the profitability indices - Return on Assets, Operating Margin, Normal
Profit Total Assets - are the significant affecting factors.
The discriminant functions predicting the closure of the group of the
hospitals, 3 years before the closure were Normal Profit to Gross
Revenues, Total borrowings and bonds payable to total assets, Total Assets
Turnover, Total borrowings and bonds payable to Revenues, Interest
expenses to Total borrowings and bonds payable and among them Normal
Profit to Gross Revenues, Total borrowings and bonds payable to total
assets, Total Assets Turnover, Total borrowings and bonds payable to
Revenues are the significant affecting factors. However 2 years before the
closure, the discriminant functions predicting the closure of the hospital
were Interest expenses to Total borrowings and bonds payable and it was
the significant affecting factor. And, one year before the closure, the
discriminant functions predicting the closure were Total Assets Turnover,
Fixed Assets Turnover, Growth Rate of Total Assets, Growth Rate of
Revenues, Interest expenses to Revenues, Interest expenses to Total
borrowings and bonds payable. Among them, Total Assets Turnover, Growth
Rate of Revenues, Interest expenses to Revenues were the significant
affecting factors.