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By Dr. David Edward Marcinko MBA MEd
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SPONSOR: http://www.MarcinkoAssociates.com
Why Hospital Essentiality?
An important component of hospital credit analysis is essentiality. Hospitals are unusual businesses that many times possess some form of essentiality to their communities. Health care is important to the economic vitality of every community. Many hospitals have served their communities for many years; it is not uncommon to find hospitals that have been continuously operating for more than 100 years in the same community.
Most hospitals are not-for-profit. In not-for-profit hospitals, no private party actually “owns” the hospital; control is vested in various boards, but no one explicitly owns a not-for-profit hospital. In a broad sense, communities own not-for-profit hospitals. They are considered “charities” with a “charitable purpose.” Though a not-for-profit hospital may not have owners, it has many “stakehold-ers,” parties that have vested interests in the continuing success of the hospital.
HOSPITAL TYPES: https://medicalexecutivepost.com/2025/08/06/hospitals-understanding-different-types/
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Many hospitals have broad and vast webs of stakeholders. Stakeholders are why hospitals rarely close or are shut down. Too many stakeholders have interests in the continuing successful operation of hospitals.
Another dimension of the essentiality analysis is service analysis. How significant are the hospital’s services? If the hospital shuts down, what population segments would suffer? How significant is the population that would suffer? How much would they suffer?
HOSPITAL ROI: https://medicalexecutivepost.com/2024/10/09/the-dupont-decomposition-equation-for-roi/
Assessment
And so, hospital stakeholder relationships need to be considered in the analysis of essentiality. How strong are these relations? How many are there? How important is the continuing success of this hospital to these stakeholders?
Analysis of hospital’s stakeholders and services should provide a credible view of the degree of essentiality associated with a hospital. Higher degrees of essentiality suggest higher likelihoods that hospitals, one way or another, will meet their commitments, particularly their payment
commitments.
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SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit an RFP for speaking engagements: CONTACT: Ann Miller RN MHA at MarcinkoAdvisors@outlook.com -OR- http://www.MarcinkoAssociates.com
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Filed under: "Ask-an-Advisor", Ask a Doctor, Ethics, finance, Health Economics, Health Insurance, Healthcare Finance, Managed Care, Marcinko Associates, Risk Management | Tagged: books, Charities, credit analysis, david marcinko, essentiality, for-profit hospitals, hospital credit analysis, hospital essentiality, not-for-profit hospitals, Technology | Leave a comment »
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