Not-for-profit health systems with credit ratings from Standard & Poor's reported flat operations but improved balance sheets in 2010, according to median financial measures.
Not-for-profits' balance sheets improved in 2010: S&P
Health systems with at least three hospitals with somewhat diversified operations were included in the analysis of 143 health systems, the report said. The median operating margin was 3% in 2010 for the second straight year. That's up from 2.4% in 2008. The median net margin, which includes investment income, climbed to 4.4% in 2010 from 2.7% the prior year and 2.4% in 2008. The report attributed the net income gain to strong investment returns and reduced capital spending. One measure of balance sheet strength, days cash on hand, increased to 175.2 days from 154 days in 2009.
Meanwhile, operating performance for the 561 health systems and standalone hospitals rated by Standard & Poor's was more mixed, according to a second report. However, balance sheets for the overall group also reflected gains similar to those of health systems. The median operating margin was 2.4% compared with 2.3% the prior year. Operations faced pressure from weaker demand, more patients unable or unwilling to pay medical bills, the economy and efforts to work more closely with physicians, the report said. The median net margin increased to 4% from 2.4%.
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