Annual expense growth for nonprofit and public healthcare organizations outpaced annual revenue growth in fiscal year 2016, according to Moody’s Investors Service.
After years of cost containment, annual expense growth hit 7.2 percent in fiscal year 2016, which outpaced annual revenue growth of 6 percent. The expenses were fueled by several factors, including rising pension contributions and higher labor and pharmaceutical costs, according to Moody’s.
“Higher expenses coupled with positive, albeit slower, revenue growth, contributed to lower profitability, tempered liquidity growth, and moderation of nearly all financial metrics,” said Beth Wexler, a Moody’s vice president.
Ms. Wexler said total admissions at nonprofit and public hospitals grew in fiscal year 2016, but the growth rate slowed due to stabilization of the uninsured population.
The medians are based on an analysis of audited fiscal year 2016 financial statements for 323 freestanding hospitals, single-state health systems and multi-state healthcare systems, representing 81 percent of all Moody’s rated healthcare entities.