Hospital leaders across the nation use benchmarking as a way to determine the areas of their business that need improvement. The continuous process of benchmarking allows hospital executives to see how their organizations stack up against local and regional competitors as well as national leaders.
Here are 45 benchmarks related to one of the most important day-to-day areas hospital executives oversee — finance.
Key ratios
Source: Moody's Investors Service, "Not-for-profit and public healthcare – US: Medians" report, September 2019.
The medians are based on an analysis of audited fiscal 2018 financial statements for 284 freestanding hospitals, single-state health systems and multistate health systems, representing 79 percent of all Moody's-rated healthcare entities. Children's hospitals, hospitals for which five years of data are not available and certain specialty hospitals were not eligible for inclusion in the medians.
1. Maintained bed occupancy: 66.6 percent
2. Operating margin: 1.8 percent
3. Excess margin: 4.3 percent
4. Operating cash flow margin: 7.9 percent
5. Return on assets: 3.6 percent
6. Three-year operating revenue CAGR: 5.6 percent
7. Three-year operating expense CAGR: 6.4 percent
8. Cash on hand: 200.9 days
9. Annual operating revenue growth rate: 5.5 percent
10. Annual operating expense growth rate: 5.4 percent
11. Total debt-to-capitalization: 33.7 percent
12. Total debt-to-operating revenue: 33.3 percent
13. Current ratio: 1.9x
14. Cushion ratio: 21.6x
15. Annual debt service coverage: 4.7x
16. Maximum annual debt service coverage: 4.4x
17. Debt-to-cash flow: 3.1x
18. Capital spending ratio: 1.2x
19. Accounts receivable: 45.9 days
20. Average payment period: 61.4 days
21. Average age of plant: 11.7 years
Hospital margins by credit rating group
Source: S&P Global Ratings "U.S. Not-For-Profit Health Care System Median Financial Ratios — 2018 vs. 2017" report, September 2019.
AA+ rating
22. Operating margin: 5.5 percent
23. Operating EBIDA margin: 12 percent
24. Excess margin: 9.2 percent
25. EBIDA margin: 14.8 percent
AA rating
26. Operating margin: 4.4 percent
27. Operating EBIDA margin: 10.1 percent
28. Excess margin: 6.7 percent
29. EBIDA margin: 12.4 percent
AA- rating
30. Operating margin: 3.4 percent
31. Operating EBIDA margin: 9.5 percent
32. Excess margin: 4.0 percent
33. EBIDA margin: 10.4 percent
A+ rating
34. Operating margin: 1.6 percent
35. Operating EBIDA margin: 7.4 percent
36. Excess margin: 3.3 percent
37. EBIDA margin: 10.1 percent
A rating
38. Operating margin: 2.1 percent
39. Operating EBIDA margin: 7.6 percent
40. Excess margin: 3.3 percent
41. EBIDA margin: 8.6 percent
A- rating
42. Operating margin: 1 percent
43. Operating EBIDA margin: 7.8 percent
44. Excess margin: 2.5 percent
45. EBIDA margin: 8.3 percent