Working Capital Management in Hospitals: Evidence from Poland

Purpose: Working capital management is one of the essential elements of financial management. In this paper, we focus on the essence of working capital management in hospitals. The research aims at the analysis of the working capital management in hospitals based on CCC. We also investigate how hospitals finance working capital changes. Design/Methodology/Approach: The research hypotheses are confirmed based on financial data from 77 non-profit hospitals in the period 2015-2018 (with the year 2014 as the basis to calculate the growth). We build panel regression models, using several dependent, explanatory and control variables. Findings: Our results explain the way non-profit hospitals manage their working capital. This process is quite different, compared to commercial (production and service) companies. We show that higher profitability correlates with a longer cash conversion cycle and that operating activities are financing by profit. The observation that the capital structure is irrelevant for the cash conversion cycle strongly supports this conclusion. Practical Implications: This research is fundamental for hospital's managers and other stakeholders. Originality/value: Although research on hospital financial management is relatively numerous, the authors rarely undertake the problem of working capital management. Our study is one of the few in this area.