Impact of Public Private Partnerships (PPPs) on Financial Performance of Council Designated Hospitals in Tanzania

Abstract

This study aims at assessing financial performance of Council Designated Hospitals (CDHs) before and after public private partnership in Tanzania. Using the stratified sampling techniques, we drew a sample of 17 CDHs from different districts/councils and examined the financial performance from 2003/4 to 2006/7 before PPP and from 20010/11 to 2013/14 after PPP. Data were extracted and summarized from respective annual financial reports over the sampled period. The study is significance since it tells the extent to which the PPP influence financial performance of CDHs. The study uses specific ratios to assess financial performance of hospitals before and after PPP. Findings revealed that, PPP has a small negative impact on operating margin and growth rate in equity. On the other hand PPP has positive and significant impact on liquidity of CDHs. specifically, liquidity performance indicates that there was a substantial growth in the hospitals liquidity position after PPP. This is marked by a significant rise in the current ratio and day’s cash on hand of CDHs after PPP, this indicates significant increase in the ability to meet short terms financial obligations increased significantly. The result also revealed that PPP has no impact on the average age of CDHs’ plant and equity financing. Conclusively, CDHs are manifesting features of not being able to remain in the business over a long period without government support.  Therefore, the study suggests that management of hospitals should increase their control over the hospitals costs; so as to enhance ability to generate profit, Improvement in profitability will have positive impact over the increase in growth rate of equity and equity financing.