Financial Fragility and Liquidity Risk in Public Hospitals: A Comparative Ratio Analysis Before and During the COVID-19 Pandemic in Hatay Province, Turkey

Abstract

This study examines the financial vulnerability and liquidity risk of Dörtyol State Hospital, located in the Dörtyol district of Hatay Province, Turkey, using the hospital’s financial data from 2015 to 2022. The hospital’s financial performance was compared with the average financial ratios of three similar public hospitals. The findings indicate that public hospitals are exposed to structural financial risks due to regulated reimbursement mechanisms, central budget allocations, and limited managerial discretion. It was determined that these risks were further exacerbated by external shocks such as administrative reforms and the COVID-19 pandemic. A significant deterioration in liquidity indicators was observed; the current ratio declined from 1.07 in 2015 to 0.26 in 2022, while the cash ratio fell to near-zero levels. The debt-to-assets ratio rose from 0.65 to 4.48 during the same period, while the equity-to-liabilities ratio fell to -0.78. Net profitability was negative in six of the past eight years, and return on assets stood at -2.17 in 2022. The findings indicate that the 2017 administrative restructuring and the COVID-19 pandemic have exacerbated existing financial weaknesses. The study recommends centralized liquidity management, crisis-focused financial planning, and a reassessment of target equity levels for public hospitals.