Appropriate reserves in the health care sector

Organizations in the health care sector are increasingly managed and judged on the basis of economic criteria. At the same time they are faced with growing risks which necessitate ‘appropriate’ reserves. Various major risks are mentioned in this paper. Health care organizations are allowed to form provisions instead of reserves, for some of these risks. The conditions under which this is allowed are discussed, as are the criteria which indicate the differences between reserves and provisions. The main part of this paper consists of a critical description and analysis of two models which can be used to determine the ‘appropriate’ size of reserves of health care organizations.