General nonprofit, acute-care hospitals are generally considered to have a negative outlook in the face of healthcare reform, but standalone children's hospitals have the financial fortitude to take reform challenges head on, according to a report from Fitch Ratings.
Fitch analysts released a report on median ratios for children's hospitals, finding that total revenue grew from 2011 to 2012. The median standalone children's hospital in Fitch's portfolio had 248.7 days of cash on hand and a 12.8 percent operating EBITDA margin, compared with 181.7 days cash on hand and a 9.4 percent operating EBITDA margin for the average general acute-care hospital.
Even though children's hospitals have higher exposure to low-paying Medicaid, they have been able to build financial solvency through strong philanthropic support and profitable commercial contracts. This will eventually allow them to look at more risk-based contracting with Medicaid and other reform efforts, according to Fitch's report.
"Standalone children's hospitals have an advantage over other general, acute-care providers given their market position in highly specialized services," read a Fitch news release. "As the coordination of care grows across the various sectors of healthcare, we expect them to remain key partners."
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