Hospitals edged away from equities and fixed-income investments and poured more assets into cash and similarly liquid holdings in 2007 compared with 2005, one snapshot of the sector shows. Ratings agency A.M. Best Co. reviewed portfolios, cash reserves, debt and operating margins for 170 hospitals in 22 states during the two-year period and found cash and short-term investments increased to 31.1% of the average portfolios assets last year, compared with 27% in 2005. Meanwhile, changes for equities declined to 21.3% last year from 23.2% two years earlier. Fixed-income assets declined to 24.9% in 2007 from 32.7% in 2004.
In addition to cash, fixed-income investments and equities, the average portfolio held 14.8% of its assets in mutual funds, 0.9% in real estate and 7% in other investments, including limited partnerships or securities lending.
The median number of days hospitals could operate on cash reserves rose to 161.8 in 2007 from 142.3 in 2004. The sectors outlook is negative, according to the report. -- by Melanie Evans