A critical analysis of credit management at a privat hispital in North-West Province : a case study

Abstract

ABSTRACT - Private hospitals in South Africa face ever increasing levels of debt accrued from fraud, non-payment and insolvency. This study evaluates Credit Management at a private hospital in the North-West Province to determine its effectiveness and efficiency. To determine the Effectiveness and Efficiency of the Credit Management function in reducing bad debt, increasing cash - flow and ultimately supporting profitability at a major private hospital in the North-West Province. This is a cross-sectional evaluative-diagnostic study of the credit control function using nonscheduled structured interviews. Significant Results: Accounts Receivable Turnover= 3.84 is the Conclusions: rate at which the hospital collects its outstanding credit accounts in during the financial year; Bad Debt percentage to Total Revenue= 3.0% The credit department is effective but not efficient in achieving senior management targets. The department is also not involved in proactive credit strategies because of the third party payment system of medical aid schemes that constitute 97% of accounts receivables.