Does Altman's z-score predict the economic viability of health maintenance organisations?

Authors:
Martha E. Jennings;Frank J. D. Cavico;Pan Yatrakis;Daniel Austin
Affiliations:
4749 Avocado Blvd., West Palm Beach, Florida 33411, USA.;H. Wayne Huizenga, School of Business and Entrepreneurship, Nova Southeastern University, 3301 College Avenue, Fort Lauderdale-Davie, Florida 33314, USA.;H. Wayne Huizenga, School of Business and Entrepreneurship, Nova Southeastern University, 3301 College Avenue, Fort Lauderdale-Davie, Florida 33314, USA.;H. Wayne Huizenga, School of Business and Entrepreneurship, Nova Southeastern University, 3301 College Avenue, Fort Lauderdale-Davie, Florida 33314, USA
Venue:
International Journal of Electronic Finance
Year:
2009

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Abstract

A history of the successful containment of healthcare costs, in addition to the federal government's endorsement of managed care, attributed to increasing numbers of Health Maintenance Organisations (HMOs) over the past 20 years. Unfortunately, with the increase in the number of organisations, there has been an increase in the number of financial failures. This paper examines the applicability of Altman's revised four-variable z-score model, a bankruptcy prediction tool designed to forecast financial failure utilising the electronically published financial data of HMOs. This research represents a seminal study in the service sector of health insurance companies that will benefit stakeholders.