Effect of Management Accounting Practices on Operational Efficiency in Public Hospitals in Homabay County

Abstract

This research aimed at examining how management accounting activities influence the efficiency of operations of public hospitals in Homabay County, Kenya. It investigated the effects of the cost-variance analysis, financial forecasting, and cash flow analysis. Correlational research structure was applied, and 200 officers were targeted in 24 hospitals, where the data was gathered with the help of survey questionnaires, and analyzed with SPSS regression methodology. Correlation analysis showed that all financial management practices were significantly positively correlated, with CVA strongly correlated with FF (r = .811, p < .001), moderately correlated with CFA (r = .706, p < .001), and fairly moderately correlated with OE (r = .422, p < .001), whereas FF was weak-to-moderately correlated with CFA (r = .536, p < .001). Regression results indicated that the overall regression model was highly significant (F = 48.288, p < .001), whereas the coefficients showed that Cost Variance Analysis (p = .026), Financial Forecasting (p = .012), and Cash Flow Analysis (p < .001) exerted a statistically significant positive effect on operational efficiency, which implied that all three financial management practices are meaningful predictors of hospital efficiency. The findings of the research were that the implementation of these types of practices along with the continuous education of staff and enhancement of systems should be regarded as the key to providing sustainable and efficient care in resource-limited settings.

Keywords:       Management accounting, cost-variance analysis, financial forecasting, cash flow analysis, operational efficiency, public hospitals, Kenya