Exploring the Appropriate Operation Ratio on Hospital Revenue Cost and Profit

Many previous researchers tried to analysis relationship between financial index of hospitals such as revenue, expenses, and profit and hospital outcome such as number of inpatient and outpatient or, between that financial index and hospital size including number of hospital beds. However, these studies did not find exact relationship between financial index and hospital efficiency and productivity. Therefore, purpose of the study explores exact relationship between hospital financial outcome and hospital efficiency and productivity using adjusted inpatient days concept from American Hospital Association. Through the empirical analysis, the researchers find that hospital profit has the U-shape quadratic function to operation ratio. 66.9% of operation ratio is changing point and hospitals with 55.8% through 75.0% of operation ration have experience deficit situation. Considering the hospital circumstance, Korean hospitals would be to maintain general hospital type with various specialty departments.