The Trust Hospital Company Limited is facing significant financial challenges due to its escalating debt levels, raising concerns about its sustainability, according to the 2023 Auditor-General’s report.
The report discloses that The Trust Hospital’s debt has surged to an alarming GH¢54,382,095.
This debt, accumulated through various borrowings, is set to be repaid with interest, further straining the hospital’s financial situation.
Since 2010, the hospital’s equity component has remained unchanged at GH¢50,000.
This stagnant equity, combined with the rising debt, has resulted in a staggering debt-to-equity ratio of 1,087.64:1.
This ratio highlights the hospital’s heavy reliance on debt financing, placing it in a precarious financial position.
In response, the hospital’s management has proposed to its sole shareholder, the Social Security and National Insurance Trust (SSNIT), to increase the equity component of the capital structure.
This proposal aims to mitigate the high debt levels and balance the hospital’s financial structure.
However, SSNIT has yet to provide a definitive response to this proposal.
The Auditor-General recommends that The Trust Hospital work closely with SSNIT management to consider converting part of the debt into shares.
This conversion would increase the current capital and help reduce the high gearing ratio, improving the hospital’s financial stability.
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