Liquidity remains a challenge for hospitals and health systems, as many continue to see revenue outpaced by spending, according to a July 25 Fitch report.
The average days cash on hand declined by 44 days last year to 216 days on average, down 17 percent year over year. Days cash on hand for nonprofit hospitals and health systems overall peaked in 2021 at 260 days. Prior to the pandemic, in 2019, nonprofit hospitals and health systems had an average of 219 days cash on hand.
"Despite the precipitous decline, which comes after a rapid strengthening in 2021, liquidity metrics remain strong for the sector and while no longer at all-time highs, still compare favorably to pre-pandemic levels," the report notes. "The metrics continue to provide some cushion against equity market volatility, inflationary pressures and added expenses due to labor scarcity."
Hospitals with higher ratings tend to have more days cash on hand. Hospitals with AA ratings have on average 273 days cash on hand, down from nearly 220 days in 2021. Hospitals with BIG ratings have 75 days cash on hand, down from 90 days last year.
Cash to debt saw a decline from 186 percent to 147 percent from 2021 to 2022, and median 2022 leverage ratios worsened. The median cash to capitalization was 34.2 percent in 2022, compared to 31.7 percent in 2021.