Model of Hospitals’ Financial Distress Forecasting: Comparative Study

Agnieszka Bem , Rafał Siedlecki , Paulina Ucieklak-Jeż , Tatana Hajdikova

Abstract

Bankruptcy forecasting models represent a higher level of financial analysis—bankruptcy models can predict impending danger of bankruptcy. The importance of bankruptcy models lies in the detection of approaching financial problems and what gives a chance of adopting appropriate management actions. The aim of research was to compare different bankruptcy forecasting models and their results for 133 hospitals from Poland, The Czech Republic and Slovakia. We have posed the following hypotheses: (H1) different bankruptcy forecasting models may give different signals and (H2) bankruptcy forecasting model elaborated for hospital industry gives more similar signals. We have found that employed model provide different results and that FSI’ results are much closer to results obtained from models elaborated for commercial companies (IN05, G INE PAN), rather than M-Model constructed on a basis of Czech, Polish and Slovak hospitals. What is more, we have found that FSI gives far more consistent results in models developed for the business sector—IN05 and G INE PAN. Our results also suggest that models dedicated to commercial businesses activity should not be directly applied to hospitals.