University of Twente Student Theses


Forecasting cash flows at an independent treatment centre

Rolink, A.T. (2023) Forecasting cash flows at an independent treatment centre.

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Abstract:With the goal of achieving high-quality, universally accessible healthcare, a reform of the Dutch healthcare system was introduced in 2006. To improve transparency and uniformity in the pricing of medical services, the model was revised to a model with the core idea that the amount of the claimable money is based on the care that was provided, which can only be assessed after the course of treatment has been finished. Consequently, hospitals face a financial management challenge: they must wait until the end of the care path before invoicing, which can vary in duration with a maximum of 120 days. This results in both a delay between the provision of care and the corresponding future cash flows, as well as ex-ante uncertainty regarding the timing and magnitude of the financial flows. This challenge complexifies cash flow forecasting, and practice shows that hospitals face difficulties to make accurate forecasts. As valid forecasts are essential to the effective running of operations, to informed strategic decision making, investments, and to firm survival, hospitals explore methods to improve forecast reliability. In this study, we used linear regression models to forecast work-in-progress (WIP) and revenue of OCON, a hospital specialized in orthopaedic and sports medical care. Results show that capacity indicators regarding the outpatient clinic and the operating rooms can be used to forecast WIP and revenue with a forecasting horizon of one month. The models forecasting WIP outperform the ones predicting revenue based on goodness of fit and forecast accuracy. However, because of the small sample sizes, we currently do not recommend applying any of the forecasting models in practice, but rather use them as a blueprint for the future when more, good quality data is available. Nonetheless, our results still provide an estimation of the impact various capacity variables have on financial outcomes and their magnitude and timing, thereby concretising the expected relationship between capacity and financial management at OCON.
Item Type:Essay (Master)
OCON Orthopedische Kliniek, Hengelo, The Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
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