Health care finance is a branch of finance that helps patients and health care beneficiaries pay for medical expenses in the short and long terms. Some health care finance concepts have a general meaning, while others relate specifically to the health care sector.
Health Benefits Ratio
Health benefits ratio equals medical expenses as a percent of premium revenues. This ratio provides insight into an insurance company's profit levels compared to medical expenses paid.
Change in Health Benefits Ratio
Change in health benefits ratio helps an analyst determine trends in medical expense payments. A negative value means margin improvement, because previous expenses are higher than current costs.
Administration to Premium
Administration to premium equals administrative expenses as a percent of medical claims paid. This ratio measures how efficient an insurance firm is in managing administrative and medical expenses.
Long-term debt is a liability that a health care finance company must repay at the maturity date or over a specified number of periods.
Operating income is a profitability indicator and equals pretax income plus interest expense minus interest income.
Operating margin equals operating income divided by operating revenues. This ratio provides insight into the health plan's operating performance.