Going Concern Checklist for Healthcare
Tailored going concern assessment for healthcare entities. Covers industry-specific indicators including funding dependency, regulatory compliance, staffing capacity, and medical liability exposure.
Going Concern
Checklist.
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Going concern assessment: Healthcare
Healthcare entities face going concern risks that intertwine financial sustainability with regulatory compliance and clinical capacity. For publicly funded healthcare organisations, funding is politically determined and can change with government priorities. For private healthcare, patient volumes and payer mix drive viability. In both cases, staffing shortages, regulatory sanctions, and medical liability claims can rapidly escalate into going concern situations.
Key risk factors: Healthcare
Key healthcare going concern indicators include: government funding reductions or changes in reimbursement formulae, regulatory sanctions or loss of accreditation, inability to recruit and retain clinical staff at sustainable cost levels, medical malpractice claims that exceed insurance coverage, declining patient volumes or unfavourable payer mix shifts, and capital expenditure requirements for ageing facilities or mandatory technology upgrades (e.g. electronic health records).
Funding dependency — for publicly funded entities, assess the security and duration of government funding commitments. Annual funding cycles create inherent uncertainty if commitments don't extend 12 months beyond the signing date.
Regulatory compliance — loss of accreditation or a regulatory enforcement action can prevent the entity from operating. Assess the status of any regulatory findings, inspection results, or improvement notices.
Staffing capacity — healthcare entities cannot operate without qualified clinical staff. Assess vacancy rates, agency staff dependency (which is typically more expensive), and the entity's ability to attract permanent staff.
Medical liability and insurance — assess the adequacy of professional indemnity insurance and the status of any claims that could exceed coverage. Uninsured or underinsured claims can be catastrophic.
Patient volume and referral patterns — for entities dependent on referrals (specialist clinics, diagnostic centres), a loss of referring relationships can significantly reduce revenue.
Capital expenditure requirements — healthcare facilities have mandatory maintenance and technology requirements. If the entity cannot fund necessary upgrades, regulatory closure is a possibility.