Moody's: 132 Statistics on Nonprofit Hospital Medians

Last week, Moody's Investors Service issued its annual medians report for nonprofit hospitals, finding that providers had a strong balance sheet in fiscal year 2012 but profitability metrics were down compared with FY 2011.

For the first time since FY 2008, Moody's found expenses outpaced revenue in nonprofit hospitals and health systems. Overall, median operating revenue growth dropped from 5.4 percent in 2011 to 5.2 percent in 2012. Net patient revenue growth dropped to 4.7 percent, more than a half-percent lower from 2011.

Balance sheets remained strong due to better returns from investments and more prudent capital spending — and Moody's analysts said strong cash reserves are "an important credit factor while operating in a period of unpredictability."

Several other trends bubbled to the surface after analyzing Moody's most recent hospital metrics, including the following:

•    Observation stays continue to increase heavily at hospitals as Medicare auditors continue to scrutinize how hospitals are labeling inpatient care.

•    Although net patient revenue still had a positive growth rate, the main profitability ratios fell from 2011, including average overall profit, average operating profit, average operating margin and average operating cash flow margin.

•    Hospitals' exposure to governmental payers increased last year at the expense of commercial payers.

•    In May, Moody's announced it would use several new credit rating indicators to better capture evolving payment and care models as the sector transitions to pay-for-performance. Within the new indicators, Moody's found that the number of covered lives increased dramatically for Medicare beneficiaries, due in large part to the proliferation of accountable care organizations. Medicare and all-payer readmission rates also decreased significantly from 2011 to 2012.

With roughly two-thirds of FY 2013 in the books, Moody's expects hospitals will continue to experience weak operating and financial metrics, thus reinforcing the credit rating agency's negative outlook of the sector. Here are 132 statistics on nonprofit hospital and health system medians, comparing FY 2011 with FY 2012.

Note: The following data are based on audited FY 2012 financial statements for 402 freestanding hospitals, single-state health systems and multistate health systems within Moody's database. Utilization and liquidity statistics are based on a smaller sample size where five years of consistent data are available. Moody's factored in the new accounting standard, which required hospitals to present bad debt as a deduction from patient service revenue starting in fiscal years ending Dec. 31, 2012. Figures vary slightly from last year's report because Moody's included multistate health systems into one overarching portfolio. Roughly half of the hospitals in the data set are "A"-rated organizations. Authors of the report are Deepa Patel, Lisa Goldstein, Kendra Smith and Jonathan Santana.

Utilization

Financial performance

Balance sheet

Key ratios

Patient revenue sources by gross revenue

New analytical indicator medians

More Articles on Hospital Financial Data:
S&P: 34 Statistics on Nonprofit Standalone Hospital Medians
Fitch: Nonprofit Hospital Liquidity Metrics Improved in 2012
S&P: 34 Statistics on Nonprofit Health System Medians