Non-profit children's hospitals traditionally have some of the highest financial metrics and ratios in the hospital sector due to high levels of philanthropy, strong investments and few, if any, competitors. However, over the past five years, their median ratios have declined to a more common industry level, according to a report from Standard & Poor's Ratings Services.
S&P rates 22 standalone children's hospitals, and all are independent and unaffiliated with any other acute-care hospital or health system. Some of the hospitals within S&P's portfolio include Lurie Children's Hospital of Chicago, Children's Hospital of Boston, Children's Hospital of Los Angeles, Children's Hospital of Philadelphia and Lucile Packard Children's Hospital in Palo Alto, Calif.
Analysts said children's hospitals still have some of the most stable finances and credit ratings, but industry pressures are increasing. For example, healthcare reform is encouraging accountable care organizations to partner with physician groups and pediatric subspecialists, which may enter children's hospitals' territory. Also, many children's hospitals rely on large amounts of Medicaid funds, which have been on the chopping block in many states, especially those that have decided against expanding Medicaid.
Overall, most children's hospitals still have high credit ratings, mostly in the "A" category. S&P compiled financial data for its higher-rated hospitals, and here are 24 of the main statistics from its report.
Children's hospitals ("A" credit rating category)
Children's hospitals ("AA" credit rating category)
S&P rates 22 standalone children's hospitals, and all are independent and unaffiliated with any other acute-care hospital or health system. Some of the hospitals within S&P's portfolio include Lurie Children's Hospital of Chicago, Children's Hospital of Boston, Children's Hospital of Los Angeles, Children's Hospital of Philadelphia and Lucile Packard Children's Hospital in Palo Alto, Calif.
Analysts said children's hospitals still have some of the most stable finances and credit ratings, but industry pressures are increasing. For example, healthcare reform is encouraging accountable care organizations to partner with physician groups and pediatric subspecialists, which may enter children's hospitals' territory. Also, many children's hospitals rely on large amounts of Medicaid funds, which have been on the chopping block in many states, especially those that have decided against expanding Medicaid.
Overall, most children's hospitals still have high credit ratings, mostly in the "A" category. S&P compiled financial data for its higher-rated hospitals, and here are 24 of the main statistics from its report.
Children's hospitals ("A" credit rating category)
|
Metric |
2012 |
2007 |
|
Net patient revenue |
$530.0 million |
$378.5 million |
|
Operating margin |
4.9 percent |
3.4 percent |
|
Maximum debt service coverage |
4.4x |
5.1x |
|
EBIDA margin |
14.9 percent |
14.6 percent |
|
Cushion ratio |
20.3x |
19.9x |
|
Days cash on hand |
264.2 |
227.7 |
Children's hospitals ("AA" credit rating category)
|
Metric |
2012 |
2007 |
|
Net patient revenue |
$921.7 million |
$749.2 million |
|
Operating margin |
3.3 percent |
3.5 percent |
|
Maximum debt service coverage |
5.1x |
6.7x |
|
EBIDA margin |
13.4 percent |
17.3 percent |
|
Cushion ratio |
32.0x |
49.2x |
|
Days cash on hand |
338.4 |
439.1 |
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