A rising stock market seems to be lifting most boats when it comes to healthcare system pension funds.
Many not-for-profit systems markedly improved the status of their employee retirement funds last year thanks to rising investment returns and a shift toward defined-contribution plans, according to Standard & Poor's annual report on healthcare pension plan medians.
The average funded status of health systems' defined-benefit pension plans rose significantly to 80% in 2013—meaning an organization on average had 80% of what it needed to cover future retirement payouts to employees. This compared with 69.2% in 2012. S&P looked at pension data for 172 health systems that ended their fiscal years Sept. 30, 2013. An adequately funded pension plan, according to ratings agencies and pension experts, hovers around 80%.
Last year offered relief for systems, but their pensions are still underfunded compared with pre-Great Recession levels, said Ken Gacka, a director in S&P's not-for-profit healthcare group. In 2007, health system pensions were funded at 90% on average. In addition, healthcare providers were behind the U.S. defined-benefit funded rate of 93.5% at the 100 largest publicly traded corporations in 2013.