Risk of Financial Distress Among CAHs: A Proposed Model (Policy Brief #20)

Publication Date: Apr 2011
Author(s): Holmes GM, Pink GH
Research Center(s): North Carolina
Project: Analyzing Financial and Operational Performance of CAHs
Topic(s): Finance
Notes: Policy Brief #20

This brief presents a model to predict the financial distress of CAHs, which will be further refined based on input from researchers, practitioners, and CAH administrators.

Key Findings 

  • The model separates hospitals into risk of financial distress categories; hospitals in the highest risk category had up to 15 times the rate of financial distress events as hospitals in the lowest category.
  • Risk of financial distress categories can provide an effective early warning system for CAH boards and administrators as well as enable state program directors to prioritize resources more effectively.