A primer on EVA for health care providers.
Unlike accounting earnings, economic profit (EVA) is a measure of a company's true earnings because it fully "accounts" for the costs of all forms of financing, including debt and equity. In the EVA view, a company is not truly profitable unless it earns a return on capital that bests the opportunity cost of capital. That being said, the question addressed here is how to measure the economic profit of providers in the health care sector, which is largely comprised of not-for-profit organizations such as clinics, laboratories, and hospitals.
Grant
James L
JL
University of Massachusetts-Boston, Boston, MA, USA.
D000067:Accounts Payable and Receivable; D002202:Capital Financing / Q000191:economics / Q000706:statistics & numerical data*; D004864:Equipment and Supplies / Q000191:economics; D005375:Financial Audit / Q000379:methods*; D005377:Financial Management, Hospital; D017408:Guidelines as Topic; D006268:Health Facilities / Q000145:classification / Q000191:economics*; D006269:Health Facilities, Proprietary / Q000191:economics; D006801:Humans; D007182:Income / Q000706:statistics & numerical data*; D007449:Investments / Q000191:economics; D017059:Models, Econometric; D009939:Organizations, Nonprofit / Q000191:economics; D010067:Ownership / Q000145:classification* / Q000191:economics; D011216:Practice Management, Medical; D019464:Tax Exemption; D013660:Taxes; D014481:United States