Cash management of selected Maltese healthcare suppliers

Abstract

Purpose: This study aimed to examine the cash management practices of pharmaceuticals and medical device companies that have received tenders from the government. The intention of this study was to ascertain whether such entities have the necessary cash management practices and liquidity required to back up the high-yielding profits they have been experiencing in recent years. Design: The study adopts a qualitative research design. In addition to the literature review, the researcher gathered the necessary data from ten semi-structured interviews with different Maltese Healthcare suppliers and one semi-structured interview with the CPSU. Findings: The findings showed that the accounting departments within such entities were headed by knowledgeable individuals who are highly aware of the importance of proper cash management. It was found that not only did MHS make use of cash flow and cash budgets to run the day-to-day operations, but they also relied on having such tools updated frequently. The study also revealed that MHS do not have the necessary checks and balances to assess their client’s creditworthiness, consequently incurring late payments from their private clients. Another identified problem regarding the MHS undiversified portfolios and their lack of interest in investing in assets other than immovable property. Conclusions: Throughout the study, it was established time and time again that the MHS have good cash management practices. However, despite this, there were still some areas which needed to improve. Ultimately, it was concluded that the majority of the MHS were considered liquid. Value: The examination of cash management practices demonstrates how efficiently MHS are managing their cash and cash equivalents and provides insights into their financial stability. Insights which are highly important given that the success of the Maltese healthcare system depends on the performance of such entities.