Development of Financial Indicators of Hospital Performance

  • Ali Janati Tabriz Health Services Management Research Center, Department of Health Services Management, School of Management and Medical Informatics, Tabriz University of Medical Sciences, Tabriz, Iran
  • Samaneh Valizadeh Department of Health Services Management, School of Management and Medical Informatics, Tabriz University of Medical Sciences, Iran
  • Mohammad Asghari Jafarabadi Department of Statistics and Epidemiology, Faculty of Health, Tabriz University of Medical Sciences, Tabriz, Iran
Keywords: Financial indicator, Financial performance, Hospital, Delphi technique


Purpose:To develop an appropriate set of financial performance indicators for use in Iranian hospitals.

Methods:This study consists of three steps. At the first step, using a literature review and three focus group discussions, the financial indicators that had been deemed to be important measures of hospital financial performance were identified. As the second step, a multidisciplinary panel of experts rated the indicators via two-round Delphi technique. Through the third step, the panel assessed the indicators at one consensus meeting.

Results:Among 102 indicators identified at the first step, 79 indicators were selected in the Delphi technique. In the panel consensus meeting, the positive consensus was achieved on the 34 indicators. Upon the experts’ opinion, eight indicators were added after few modifications and 13 new indicators were developed.  Finally, 55 indicators were selected as financial indicators for assessing the hospital performance.

Conclusion:This study developed a set of financial indicators for Iranian hospitals, that helps hospital managers to identify hospital financial trends over a period of time and compare their performance with peer hospitals. The information derived from these indicators, may guide plans and decisions to improve hospital financial performance.


Gapenski LC, Pink GH. Understanding healthcare financial management. fifth ed. United States of America: The Foundation of the American College of Healthcare Executives; 2007.

Gapenski LC. Healthcare finance: An introduction to accounting and financial management third ed. United States of America: The Foundation of the American College of Healthcare Executives; 2005.

Parkinson J, Tsasis P, Porporato M. A critical review of financial measures as reported in the Ontario hospital balanced scorecard. Journal of health care finance. 2007 2007;34(2):48-56.

Zelman WN, McCue MJ, Millikan AR, Glick ND. Financial management of health care organizations: an introduction of fundamental tools, concepts, and applications. second ed: Blackwell; 2003.

Suarez V, Lesneski C, Denison D. Making the case for using financial indicators in local public health agencies. American journal of public health. 2011 Mar;101(3):419-25.

Pizzini MJ. The relation between cost-system design, managers' evaluations of the relevance and usefulness of cost data, and financial performance: an empirical study of US hospitals. Accounting, Organizations and Society. 2006;31(2):179-210.

Love D, Revere L, Black K. A current look at the key performance measures considered critical by health care leaders. J Health Care Finance. 2008 Spring;34(3): 19-33.

Pink GH, Holmes GM, D'Alpe C, Strunk LA, McGee P, Slifkin RT. Financial indicators for critical access hospitals. Journal of Rural Health. 2006 Sum;22(3):229-36.

Watkins AL. Hospital financial ratio classification patterns revisited: Upon considering nonfinancial information. Journal of Accounting and Public Policy. 2000;19(1):73-95.

Novick LF, Morrow CB, Mays GP. Public health administration: principles for population-based management. 2 ed. Subbury, Massuchusetts: Jones & Bartlett Publishers; 2008.

Gruen R, Howarth A. Financial management in health services: London School of Hygiene and Tropical Medicine; 2005.

Pink GH, Daniel I, Hall LM, Mckillop L. Selection of key financial indicators: A literature, panel and survey approach Healthcare Quatrerly. 2007;10(1):87-96.

Watson D, Finlayson G, Jacobs P. Comparing apples to apples: the relative financial performance of Manitoba's acute care hospitals. Healthcare management forum. 2002;Suppl:39-46.

Cleverley WO, Cleverley JO. Scorecards and dashboards: using financial metrics to improve performance. Healthc Financ Manage. 2005 Jul;59(7):64-9.

Younis MZ, Younies HZ, Okojie F. Hospital financial performance in the United States of America: a follow-up study. Eastern Mediterranean Health Journal. 2006 Sep;12(5): 670-8.

Ozgulbas N, Koyuncugil AS. Financial profiling of public hospitals: an application by data mining. International Journal of Health Planning and Management. 2009 Jan-Mar;24(1):69-83.

McCue MJ, Nayar P. A Financial Ratio Analysis of For-Profit and Non-Profit Rural Referral Centers. Journal of Rural Health. 2009 Sum;25(3):314-9.

Kim TH. Factors associated with financial distress of nonprofit hospitals. The Health Care Manager. 2010;29(1): 52-62.

McCracken MJ, McIlwain TF, Fottler MD. Measuring organizational performance in the hospital industry: an exploratory comparison of objective and subjective methods. Health services management research : an official journal of the Association of University Programs in Health Administration / HSMC, AUPHA. 2001 2001-Nov;14(4):211-9.

Schuhmann TM. Hospital financial performance trends to watch. Healthcare financial management : journal of the Healthcare Financial Management Association. 2008 2008-Jul;62(7):59-66.

Velez-Gonzalez H, Pradhan R, Weech-Maldonado R. The role of non-financial performance measures in predicting hospital financial performance: the case of for-profit system hospitals. Journal of health care finance. 2011;38(2): 12-23.

Pink GH, Holmes GM, Thompson RE, Slifkin RT. Variations in financial performance among peer groups of critical access hospitals. Journal of Rural Health. 2007 Fal;23(4):299-305.

O'Neill SM, Ettner SL, Lorenz KA. Are Rural Hospices at a Financial Disadvantage? Evidence from California. Journal of Pain and Symptom Management. 2009;37(2): 189-95.

Pink GH, McKillop I, Schraa EG, Preyra C, Montgomery C, Baker GR. Creating a balanced scorecard for a hospital system. Journal of health care finance. 2001 2001;27(3):1-20.

Wang BB, Wan TT, Falk JA, Goodwin D. Management strategies and financial performance in rural and urban hospitals. J Med Syst. 2001 Aug;25(4):241-55.

Chen HF, Bazzoli GJ, Hsieh HM. Hospital Financial Conditions and the Provision of Unprofitable Services. Atl Econ J. 2009 Sep 1;37(3):259-77.

Koyuncugil AS, Ozgulbas N. Early Warning System for Financially Distressed Hospitals Via Data Mining Application. Journal of Medical Systems. Aug;36(4):2271-87.

Ozmeral AB, Reiter KL, Holmes GM, Pink GH. A Comparative Study of Financial Data Sources for Critical Access Hospitals: Audited Financial Statements, the Medicare Cost Report, and the Internal Revenue Service Form 990. Journal of Rural Health. Fal;28(4):416-24.

Harrison MG, Montalvo CC. The financial health of California hospitals: A looming crisis. Health Affairs. 2002 Jan-Feb;21(1):118-26.

Bazzoli GJ, Chan B, shortell SM, D'Aunno T. The financial performance of hospitals belonging to health networks and systems. Inquiry-Blue Cross and Blue Shield Association. 2000;37(3):234-52.

Carpenter CE, McCue MJ, Hossack JB. Association of bond, market, operational and financial factors with multi-hospital system bond issues. Journal of Health Care Finance. 2001;28(2): 26-34.

Cleverley WO. The hospital cost index: a new way to assess relative cost efficiency. 2008.

McCue MJ, Thompson JM, Dodd-McCue D. Association of market, mission, operational and financial factors with hospital's level of cash and security investments. Inquiry-Blue Cross and Blue Shield Association. 2001;37(4): 411-22.

Nasiripour AA, Tabibi SJA, Begloo AG, Jadidi RA. Designing a performance evaluation model for Iranian public hospitals: using the balanced scorecard. Journal of Arak University of Medical Sciences. 2009;12(1):95-106.

Salehi MZ, Nasiripour AA. Financial performance evaluation of budget plan in social security hospitals of Tehran. Medical Journal of Social Security. 2008;7(41):213-22.

Aarabi SM, Razmjoy M. Financial strategy. Tehran, Iran: institu IzIran; 2009.

Berger s. Fundamental of healthcare financial management: a practical guide to fiscal issues and activities. third ed. San Francisco, United States of America: Jossey-Bass; 2007.

Wong LP. Focus group discussion: a tool for health and medical research Singapore Med J. 2008;49(3):256-61.

Twohing PL, Putnam W. Group interviews in primary care research: advancing the state of the art or ritualized research? Family Practice. 2002;19(3): 278-84.

Wilson S, Hauck Y, Bremner A, Finn J. Quality nursing care in Australian paediatric hospitals: a Delphi approach to identifying indicators. Journal of Clinical Nursing. 2012;21:1594-605.

Hasson F, Keeney S, McKenna H. Research guidelines for the delphi survey technique. Journal of Advanced Nursing. 2000; 32:1008-15.

Keeney S, Hasson F, McKenna H. A critical review of the delphi technique as a research methodology for nursing. International Journal of Nursing Studies. 2001;38:195-200.

Hutchings A, Raine R. A systematic review of factors affecting the judgments produced by formal consensus development method in health care. Journal of Health Services Research & Policy. 2006;11:172-9.

Landeta J. Current validity of the Delphi method in social sciences. Technological Forecasting and Social Change. 2006;73(5):467-82.

Ahmadi F, Nasiriani K, Abazari P. Delphi Technique: instrument for research. Education in Medical Sciences. 2008;8(1):175-85.

Meliones J. Saving money, saving lives. Harvard Business Review. 2000;78(6):57-67.

Johnson H, Frack S. Critical indicators for enterprise performance. Health Forum Journal. 2001;44(1):42-3.

Lawrence CM, Kurtenbach JM. Medicare reimbursement debt financing and measures of service eorts and accomplishments in the healthcare industry. International Journal of Public Administration. 1995;18(2&3):355-81.

Gardiner LR, Oswald SL, Jahera JS. Prediction of hospital failure. Hospital and Health Services Administration. 1996;41(4):441-60.