Hospitals in acute financial need: report

Hospitals are finding it increasingly difficult to pay off their debts to health insurers, according to an analysis by accounts firm PwC on Tuesday.


On the basis of the annual reports of 70 of the 83 hospitals in the Netherlands, PwC says liquidity has not risen sufficiently to cover the growing debt.
Currently, hospitals are in debt to health insurers to the tune of €2bn and are also coping with productivity bonuses and a new declaration system, PwC’s Arjen Hakbijl told website nu.nl.
The debt is caused by health insurers reclaiming over-payment from the past and becoming reluctant to finance working capital.
Because of this, liquidity is decreasing and PwC thinks many hospitals will need extra money this year equal to three months’ turnover.
Losses
The number of loss-making hospitals rose to five in 2011 from four the year earlier, says PwC. Pointing out that three hospitals have not yet submitted their annual report, the company says the average loss in 2011 was €3.6m, the same as in 2010.
Turning these debts into bank loans has become harder, says Hakbijl. ‘Banks take a much more critical look at the potential of hospitals and make higher demands. They are only partly filling the role of health insurers in financing working capital,’ he told nu.nl.
PwC’s conclusion that ‘there is little sign of a sustainable financial situation’ in hospitals chimes with the findings of sector peer Deloitte, which said last week that hospitals urgently need to strengthen their working capital.

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