Here are 18 health systems with strong operational metrics and solid financial positions, according to reports from Fitch Ratings, Moody’s Investors Service and S&P Global Ratings.
1. Altamonte Springs, Fla.-based AdventHealth has an “Aa2” rating and stable outlook with Moody’s and an “AA” rating and a stable outlook with Fitch. The system has strong profitability, solid liquidity and presence in several high growth markets, Fitch said.
2. St. Louis-based BJC HealthCare has an “AA” rating and stable outlook with S&P and an “Aa2” rating and stable outlook with Moody’s. The health system has a leading market share and a highly regarded reputation, particularly for its flagship hospitals that are affiliated with Washington University School of Medicine in St. Louis, S&P said. The health system has consistently produced stable earnings and cash flow, even during the COVID-19 pandemic, according to the credit rating agency.
3. Dallas-based Children’s Health System of Texas has an “AA” rating and stable outlook with Fitch. The system has robust operating profitability, good expense management and strong EBITDA margins, according to Fitch.
4. Cleveland Clinic has an “Aa2” rating and stable outlook with Moody’s. The system’s international brand will allow it to grow revenue outside of the northeast Ohio market and offset the effects of the pandemic on patient volume, Moody’s said. The credit rating agency expects the system to maintain good cash flow margins.
5. Evansville, Ind.-based Deaconess Health System has an “AA” rating and stable outlook with Fitch. The health system has strong operating performance and an expanding footprint in a stable and economically diverse service area, Fitch said. Investments in core service lines should help support patient volume growth, according to the credit rating agency.
6. Durham, N.C.-based Duke Health has an “AA” rating and stable outlook with Fitch. The system has a strong clinical reputation and a solid balance sheet with substantial liquidity reserves, Fitch said.
7. Pinehurst, N.C.-based FirstHealth of the Carolinas has an “AA” rating and stable outlook with Fitch. The health system has a strong financial profile and stable operating performance, despite disruption from the COVID-19 pandemic, Fitch said. The health system’s revenue in the first quarter of fiscal 2021 rebounded to levels close to historical trends, according to the credit rating agency.
8. Milwaukee-based Froedtert Health has an “AA” rating and stable outlook with Fitch. The system has a solid market position and a robust liquidity position, Fitch said. The credit rating agency expects Froedtert to maintain robust operating cash flow levels.
9. Indianapolis-based Indiana University Health has an “Aa2” rating and stable outlook with Moody’s and an “AA” rating and positive outlook with Fitch. Cost controls and patient volume will help the system sustain strong margins and liquidity, Moody’s said.
10. IHC Health Services, the borrowing group of Salt Lake City-based Intermountain Healthcare, has an “Aa1” rating and stable outlook with Moody’s. Intermountain has a leading statewide market position, low debt levels and strong cash levels, Moody’s said. The credit rating agency expects Intermountain will sustain strong margins and cash levels.
11. Falls Church, Va.-based Inova Health System has an “Aa2” rating and stable outlook with Moody’s. The system has a strong financial profile, and Moody’s expects Inova’s balance sheet to remain exceptionally strong.
12. Rochester, Minn.-based Mayo Clinic has an “Aa2” rating and stable outlook with Moody’s. The health system has strong balance sheet measures, an excellent market position and strong patient demand at its three academic campuses in Minnesota, Arizona and Florida, Moody’s said. The credit rating agency expects strong patient demand and steps taken by management to allow Mayo to maintain adequate cash flow and strengthen balance sheet measures.
13. Traverse City, Mich.-based Munson Healthcare has an “AA” rating and stable outlook with Fitch. The system has strong leverage and liquidity, Fitch said. The credit rating agency expects Munson to maintain solid operating cash flow margins.
14. Tupelo-based North Mississippi Health Services has an “AA” rating and stable outlook with Fitch. The system has a leading market share in a large 20-county service area and strong adjusted leverage metrics, Fitch said.
15. Chicago-based Northwestern Memorial HealthCare has an “Aa2” rating and stable outlook with Moody’s and an “AA+” rating and stable outlook with S&P. The health system had strong pre-COVID margins and liquidity, Moody’s said. The credit rating agency expects the system to maintain strong operating cash flow margins.
16. Columbus-based OhioHealth has an “Aa2” rating and stable outlook with Moody’s and an “AA+” rating and stable outlook with S&P. The system has a leading market position and opportunities for service line expansion, Moody’s said. The credit rating agency expects the system’s strong liquidity to provide ample cushion for volatility in investment returns.
17. Stanford (Calif.) Health Care has an “AA” rating and stable outlook with Fitch. The system has broad reach and is a clinical destination for high acuity services, Fitch said. The credit rating agency expects the system to sustain strong EBITDA margins.
18. Iowa City-based University of Iowa Hospitals & Clinics has an “Aa2” rating and stable outlook with Moody’s. The credit rating agency expects the system to maintain strong operating performance and cash flow. The system benefits as the only academic medical center in Iowa, according to Moody’s.
- S&P Global Ratings on Wednesday upgraded its view on the nonprofit healthcare sector to stable. It had been at negative since March 2020, a view that was affirmed in January.
- Analysts said the change results from coronavirus vaccination rates and decreasing COVID-19 cases as well as a drop in the unemployment rate that should reduce payer mix shakeup. They also pointed to generally healthy balance sheets across the sector.
- Headwinds remain, most notably labor expenses as burnout among staff was heavily exacerbated by the pandemic. Increased salaries and benefit expenses will dampen margins going forward, according to the report.
The change is another sign for providers that their financial situation is on a rather swift recovery from the upheaval caused by the pandemic. Although some facilities, especially those that are smaller and in rural areas, are certainly still struggling, that was the case before COVID-19 as well.
Most nonprofit health systems reported first-quarter results that showed improved volumes and investment returns. Some are still sporting more than a year’s worth of cash on hand.
The S&P analysts warned, however, that potential COVID-19 outbreaks this fall would be a setback. That remains a concern with some parts of the country lagging in vaccination rates and the increasing prevalence of more contagious COVID-19 variants.
Other risks include the end of enhanced federal reimbursement and the return of the Medicare sequester cuts when the public health emergency ends, which is expected to be after the end of this year.
But the analysts said agile management teams should be able to combat these challenges.
“[T]o the extent that the pandemic has enabled faster decision making and allowed management teams to pivot and identify new opportunities for expense base restructuring and revenue enhancement, we believe these risks are manageable within our view of the stable sector view,” according to the report.
Anthem reaffirmed its profit guidance for 2020 as the insurer expects continued financial growth despite the COVID-19 pandemic, according to a June 9 filing with the Securities and Exchange Commission.
Anthem officials said their full-year guidance will be greater than $21 per share. The company expects to generate about 70 percent of its adjusted earnings in the first half of the year.
Anthem reported first-quarter revenues of $29.6 billion, up from $24.7 billion in the same period a year before. Anthem ended the quarter with $1.5 billion in profits, down slightly from $1.6 billion a year prior.
The health systems listed below recently released financial results for the quarter ended March 31.
|Health system||Revenue||Operating income||Net income|
|Indiana University Health||$1.6 billion||$77.6 million||-$631.3 million|
|Allina Health||$1 billion||-$67.5 million||-$342.5 million|
|Kaiser Permanente||$22.6 billion||$1.3 billion||-$1.1 billion|
|Beaumont Health||$1.1 billion||-$54.1 million||-$278.4 million|
|BayCare||$1.1 billion||$50 million||-$656.4 million|
|CommonSpirit Health||$7.8 billion||-$145 million||-$1.4 billion|
|Mayo Clinic||$3.2 billion||$29 million||-$623 million|
|Henry Ford Health System||$1.5 billion||-$36.2 million||-$234.5 million|
|Intermountain Healthcare||$2.3 billion||$115 million||-$1 billion|
|Advocate Aurora Health||$3.1 billion||-$85.6 million||-$1.3 billion|
|Texas Health Resources||$1.1 billion||-$13.8 million||-$802.9 million|
|Banner Health||$2.4 billion||$30.6 million||-$683.5 million|
|Ascension||$6.1 billion||-$429.4 million||-$2.7 billion|
|AdventHealth||$2.9 billion||$35.7 million||-$578.5 million|
|Ochsner Health||$965 million||-$32.8 million||-$143.6 million|
|Providence||$6.3 billion||-$276 million||-$1.1 billion|
|Cleveland Clinic||$2.6 billion||-$39.9 million||-$830.6 million|
|Sutter Health||$3.2 billion||-$236 million||-$1.1 billion|
|Dartmouth-Hitchcock Health||$563 million||-$59.3 million||-$150.3 million|
|UPMC||$5.5 billion||-$41 million||-$653 million|
|Montefiore Health System||$1.5 billion||-$116.1 million||-$96.7 million|
|Allegheny Health Network||$891 million||-$59.5 million||-$98.5 million|
|SSM Health||$1.9 billion||-$78 million||-$471.1 million|
|Northwell Health||$3.1 billion||-$141 million||-$710 million|
|MedStar Health||$1.5 billion||$32.2 million||-$246.8 million|
|Scripps Health||$899.6 million||$47.1 million||-$296 million|
|NewYork-Presbyterian||$2.2 billion||-$128.5 million||-$569.4 million|