Question

What problems are inherent in the use of financial ratios for US hospitals? This discussion should include identifying benchmarking data sources and the risks in utilizing this data.

Answer 1

Financial ratios can be commonly used by healthcare organizations, for profitability, information and to get proper direction for success. But there are also some drawbacks associated with it for the U.S. healthcare organizations. Some of them are -

1. Healthcare organizations can get know what issue has occurred but there is no possibility for them to know how the issue has occurred and what lead to have caused a problem.
2. Although financial ratios help a venture to understand its changes overtime, but it can't compare one company with another. This lead to have problems in the U.S. hospitals as they get narrow scope for their improvement.
3. It also fails to notify how a business is performing and how it will be performing in the future. Due to this reason, hospitals in U.S. don't understand when to improve their quality of care towards it's patients also their own benchmarks.

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