The County Public Hospital Fixed Assets Expansion And Long-term Debt Financing Analysis In Shandong Province

BackgroundThe county public hospitals at the county level as an important subject of health services in China, plays a significant role in meeting the health service demand of urban and rural residents in our country and safeguarding residents’ health. In recent years, with the improvement of people’s living level and the improvement of the new rural cooperative medical system, the rural medical service demand to be released, the demand of patients began to rise gradually, so that the competition becomes increasingly fierce in the medical market. In order to seek the medical service market share, public hospitals at the county level started a large-scale construction of basic facilities, equipped with medical equipment and other fixed assets to meet the business needs. With fixed assets expansion at the hospital, however, long-term debt problem is becoming more and more serious. In 2011, long-term debt of the national public hospitals at the county level has reached 65.85 billion yuan, the basic construction and equipment accounted for 73%, and asset-liability ratio reached a record high of 36.7%.The debt problem is still not solved very well. If not strengthen to resolve debt, debt financing once out of control, unable to pay due debts, hospitals will be faced with financial crisis, which affects the normal operation and development of the hospital. Therefore, it has important practical significance that analyze the utilization of fixed assets at the county level, whether to obtain the corresponding economic and social benefits, and research long-term debts formed by the expansion of fixed assets and the financing problems of fixed assets.ObjectivesBy studying expansion of fixed assets and the debt financing situation of county public hospital in Shandong province from 2006 to 2012, mainly for use index and economic benefit index of fixed assets, fixed assets financing, the size, structure and debt repayment of long-term debt, analyze fixed asset expansion whether to meet the needs of the development of health care and obtain the corresponding economic benefits, analysis sources of funding and financing risk, further analysis the hospital expansion is reasonable, whether there is excessive expansion to cause the debt crisis, so as to provide reference for hospital managers operator basis and policy Suggestions.MethodsOn the basis of literature review, reference the 《Hospital Accounting System》, 《Financial Management》, 《Health Financial Management》 and other materials, collecting financial indicators which can reflect the economic situation and debt situation of the hospital fixed assets. Using ratio analysis, comparative analysis, trend analysis, analysis the quantitative information on the 2006-2012 Shandong Health Annual Report and the financial statements of the three sampling areas combined with selected financial indicators.Results1. During the 2006-2012, the county public hospital fixed assets was 17.12% average annual growth rate, the average annual growth rate of 19.73% for professional equipment, with an annual growth rate of houses and buildings of 15.49%, based on the use of hospital beds rate, bed turnover frequency of reflecting the efficiency indexes in 2012 compared to 2006 is also a corresponding increase of 17.2%,10.81 times. while the output rate of fixed assets, income rate, hundred medical equipment medical income, fixed return on assets in fixed assets of reflecting economic indicators emerged as an increasing trend, however, with the increase of medical professional equipment, inspection revenue also increased year by year, from 2006 to 2012, examine revenue was 25.24% average annual growth rate.2. During 2006-2012, public hospitals at the county level of long-term debt rose at a high speed, and for the basic construction and equipment purchase of debt are also rise year by year, and from the perspective of the structure of long-term debt, long-term loans accounted for the proportion of long-term liabilities rising trend year by year, and long-term accounts payable accounts for the proportion of long-term liabilities decreasing trend year by year, long-term loans also began to gradually become the main financing way of public hospitals at the county level.3. During 2006-2012, county level public hospitals long-term solvency, mainly from two aspects of asset size and profitability, asset-liability ratio and long-term debt assets ratio and equity ratio and shareholder owners’ equity ratio of the four indicators reflect the asset scale, before and after the reform, long-term solvency of county-level hospitals have big difference, after the implementation of the new medical reform, in order to speed up the county hospital development, the expansion of the scale, debt burden is heavier, and the sales (business) income of interest rate and the multiple of interest safeguard both reflect the profitability indicators, the hospital by the proportion of business income to repay debt interest decrease year by year, the hospital’s ability to repay long-term debt has a tendency to decrease year by year, debt pressure is also more and more heavier.4. Three sampling at the county level public hospital, A hospital in 2010-2012 average growth rate of 7.08% of fixed assets, fixed assets expansion efficiency is higher, lower long-term debt pressure; Hospital B 7.17% average growth rate of fixed assets, fixed assets expansion efficiency is higher, but had the long-term debt pressure; Hospital C average growth rate of hospital’s fixed assets was 25%, the expansion of the fixed assets not only failed to obtain corresponding economic benefit, and long-term debt pressure is also big.SuggestionsOn the perspective of the reasonable expansion of the fixed assets, Shandong Province and the decimation of A,B two country public hospital, from the use of efficiency achieved, the expansion is reasonable. For the funds raised for the fixed assets, long-term debt may well be an option. Due to the reasonable side of the expansion and liabilities, therefore, a complete ban on lending policy simply is not appropriate. Hospitals only need to do debt management, establishing debt risk monitoring and early warning mechanisms. Meanwhile, based on the increasing finance, hospitals can explore other non-debt financing ways to reduce the debt pressure. From the perspective of an unreasonable expansion of the fixed assets, like C hospital, the expansion of the hospital’s fixed assets is unreasonable. Health authorities should immediately control its expansion, prevent its overexpansion and further deepen, but also to resolve its debt.