Fiscal management boosts hospital results
This week brought another snapshot of how not-for-profit hospitals fared last year as unemployment climbed and shaken markets dropped sharply before beginning to recover.
Moody's Investors Service published the median financial performance for about 400 hospitals and health systems that operate in one state with a credit rating from the agency. For two-thirds of the not-for-profits in the analysis, fiscal 2009 ended in September or earlier, and the year started during the tumultuous calendar year 2008, when the credit crisis erupted.
Hospitals and these regional systems curbed spending on salaries and benefits and were more hesitant to take on new debt in 2009. That tighter grip on expenses and investment portfolios’ rebound that began in March helped raise margins and cash reserves. (Hospitals’ fiscal years that ended throughout 2009 and those that closed their books earlier did not see the same investment gains as those that ended the year in December.)
Among 401 hospitals and single-state systems surveyed, the median profit was $9.6 million in 2009 and the median operating margin was 2.3%. The prior year’s medians for profit and operating margin were $6.5 million and 1.8%, respectively. Margins improved despite the fact that hospitals admitted the same number of patients in 2009 as 2008, which Moody’s attributes in part to unemployment and rising out-of-pocket costs for patients. However, demand for outpatient care increased last year by 3.8%, compared with 2.5% in recent years.
The rate of growth in the aggregate debt load increased 5.7% last year, down from 7.1% in 2008 and 10.4% in 2007, Moody’s said.
