67 financial benchmarks for health system executives

35 financial benchmarks for healthcare executives | HENRY KOTULA

Health system leaders use benchmarking as a way to determine how their organizations stack up against both local and regional peers.

Below are 67 financial benchmarks, including key ratios for health systems, as well as revenue and margin metrics, broken down by rating category.

Key balance sheet metrics, ratios:

Source: Fitch Ratings’ “2021 Median Ratios: Not-for-Profit Hospitals and Healthcare Systems” report. It was released Aug. 3. 

1. Cash on hand: 255 days

2. Accounts receivable: 44.6 days

3. Cushion ratio: 29x

4. Current liabilities: 95 days

5. Cash to debt: 169.9 percent

6. Cash to adjusted debt: 161.1 percent

7. Operating margin: 1.3 percent

8. Operating EBITDA margin: 6.7 percent

9. Excess margin: 3.1 percent

10. EBITDA margin: 8.5 percent

11. Net adjusted debt to adjusted EBITDA: -2.6 percent

12. Personnel costs as percent of total operating revenue: 55 percent

13. EBITDA debt service coverage: 3.9x

14. Operating EBITDA debt service coverage: 3.2x

15. Maximum annual debt service as percent of revenues: 2.2 percent

16. Debt to EBITDA ratio: 4.4x

17. Debt to capitalization: 35.2 percent

18. Average age of plant: 11.4 years

19. Capital expenditures as percent of depreciation expense: 110.1 percent

Margins, revenue financial benchmarks broken down by rating category: 

Source: S&P Global Ratings “U.S. Not-For-Profit Health Care System Median Financial Ratios — 2019 vs. 2021″ report.” The report was released Aug. 30.

“AA+” rating

20. Net patient service revenue: $4.16 billion

21. Total operating revenue: $4.43 billion

22. Operating margin: 4.5 percent

23. Operating EBIDA margin: 11.3 percent

24. Excess margin: 5.5 percent

25. EBIDA margin: 12.2 percent

“AA” rating

26. Net patient service revenue: $3.98 billion

27. Total operating revenue: $4.95 billion

28. Operating margin: 3.2 percent

29. Operating EBIDA margin: 8.3 percent

30. Excess margin: 5.8 percent

31. EBIDA margin: 10.7 percent

“AA-” rating

32. Net patient service revenue: $3.08 billion

33. Total operating revenue: $3.41 billion

34. Operating margin: 1.9 percent

35. Operating EBIDA margin: 7.1 percent

36. Excess margin: 4.1 percent

37. EBIDA margin: 9.2 percent

“A+” rating

38. Net patient service revenue: $2.26 billion

39. Total operating revenue: $2.55 billion

40. Operating margin: 3 percent

41. Operating EBIDA margin: 7.1 percent

42. Excess margin: 5.5 percent

43. EBIDA margin: 10.9 percent

“A” rating

44. Net patient service revenue: $2.69 billion

45. Total operating revenue: $3.07 billion

46. Operating margin: 0.7 percent

47. Operating EBIDA margin: 6.6 percent

48. Excess margin: 5.5 percent

49. EBIDA margin: 2.3 percent

“A-” rating

50. Net patient service revenue: $2.08 billion

51. Total operating revenue: $2.69 billion

52. Operating margin: 0.6 percent

53. Operating EBIDA margin: 6.7 percent

54. Excess margin: 2.4 percent

55. EBIDA margin: 8 percent

“BBB+” rating

56. Net patient service revenue: $1.85 billion

57. Total operating revenue: $2.27 billion

58. Operating margin: -0.2 percent

59. Operating EBIDA margin: 5 percent

60. Excess margin: 0.5 percent

61. EBIDA margin: 6 percent

“BBB” rating

62. Net patient service revenue: $2.96 billion

63. Total operating revenue: $4.11 billion

64. Operating margin: -3.2 percent

65. Operating EBIDA margin: 1.6 percent

66. Excess margin: -2 percent

67. EBIDA margin: 2.8 percent

11 health systems with strong finances

11 health systems with strong finances

Hospital Mergers, Acquisitions, and Affiliations | Case Study – RMS

Here are 11 health systems and hospitals with strong operational metrics and solid financial positions, according to reports from Fitch Ratings, Moody’s Investors Service and S&P Global Ratings.

1. Morristown, N.J.-based Atlantic Health System has an “Aa3” rating and stable outlook with Moody’s. The credit rating agency expects the health system to continue to generate favorable operating performance and to maintain double-digit operating cash flow margins and solid debt coverage. 

2. Charlotte, N.C.-based Atrium Health has an “Aa3” rating and stable outlook with Moody’s and an “AA-” rating and stable outlook with S&P. Atrium and Winston-Salem, N.C.-based Wake Forest Baptist Health merged in October. The addition of the Winston-Salem service area and Wake Forest Baptist’s academic and research programs enhances Atrium’s position within the highly competitive North Carolina healthcare market, S&P said. 

3. Dallas-based Baylor Scott & White Health has an “Aa3” rating and stable outlook with Moody’s. The system has strong liquidity and is the largest nonprofit health system in Texas, Moody’s said. The credit rating agency expects Baylor Scott & White Health to continue to benefit from its centralized operating model, proven ability to execute complex strategies and well-developed planning abilities. 

4. Pittsfield, Mass.-based Berkshire Health System has an “AA-” rating and stable outlook with Fitch. The health system has improved its liquidity while investing in facilities without increasing its debt load, Fitch said. The credit rating agency expects the system to maintain a strong financial profile. 

5. Mishawaka, Ind.-based Franciscan Alliance has an “Aa3” rating and stable outlook with Moody’s. The system has leading positions in key markets and a strong cash position, Moody’s said. The credit rating agency expects the system to sustain double-digit operating cash flow margins. 

6. 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. 

7. Palo Alto, Calif.-based Lucile Packard Children’s Hospital at Stanford has an “AA-” rating and stable outlook with Fitch. The hospital is nationally known, has a strong market position and is one of two key clinical partners of Stanford University, Fitch said. 

8. Grand Blanc, Mich.-based McLaren Health Care has an “AA-” rating and stable outlook with Fitch. The health system has a strong financial profile and a leading market position over a broad service area that covers much of Michigan, Fitch said. 

9. Winston-Salem, N.C.-based Novant Health has an “AA-” rating and stable outlook with Fitch. The system has strong margins, and each of its markets has met or exceeded budgeted expectations over the past four years, Fitch said. 

10. Renton, Wash.-based Providence has an “Aa3” rating and stable outlook with Moody’s. Providence has a large revenue base and a leading market share in most of its markets, according to Moody’s. The credit rating agency expects the system’s operations to improve this year. 

11. Livonia, Mich.-based Trinity Health has an “AA-” rating and stable outlook with Fitch. The rating is driven by Trinity’s national size and scale, with significant market presence in several states, Fitch said. The credit rating agency expects the system’s operating margins to improve in the long term. 

The Covid Tracking Project

Data Sources - C3.ai

https://covidtracking.com/data/charts/us-all-key-metrics

https://covidtracking.com/data/charts/us-currently-hospitalized

https://covidtracking.com/data/charts/us-daily-deaths

https://covidtracking.com/data/charts/us-daily-positive

https://covidtracking.com/data/charts/cases-per-million-by-state

https://covidtracking.com/data/charts/hospitalized-per-million-by-state

8 health systems with strong finances

https://www.beckershospitalreview.com/finance/8-health-systems-with-strong-finances-091620.html?utm_medium=email

Here are eight 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. Minneapolis-based Allina Health has an “AA-” rating and stable outlook with Fitch. The health system has a strong financial profile and is the acute care leader in the broad Twin Cities metro area, Fitch said. The credit rating agency said Allina’s proven ability to rebound quickly from operating challenges supports the stable outlook.

2. Children’s Healthcare of Atlanta has an “Aa2” rating and stable outlook with Moody’s. The system has strong operating margins and is the leading pediatric provider in the Atlanta area, Moody’s said. The credit rating agency expects Children’s Healthcare of Atlanta to continue to generate robust margins and maintain exceptional liquidity while undergoing a new campus expansion project.

3. La Crosse, Wis.-based Gundersen Health System has an “AA-” rating and stable outlook with Fitch. The health system has consistently strong operating performance, strong balance sheet metrics and a low debt burden, Fitch said. The credit rating agency said Gundersen’s rating continues to be supported by its leading market position and expanding operating platform.

4. Houston Methodist has an “AA” rating and stable outlook with S&P. The system, which comprises an academic medical center and six community hospitals, has a strong enterprise profile and a history of excellent margins and cash flow, S&P said. The credit rating agency said Houston Methodist is well positioned to withstand the pressures from COVID-19.

5. Indianapolis-based Indiana University Health has an “AA” rating and stable outlook with Fitch. The health system has a solid balance sheet and strong operating cash flow despite short-term pressure from the COVID-19 pandemic. The credit rating agency expects IU Health’s EBITDA margins will range between 12 percent and 14 percent annually when margins recover from the pandemic.

6. Broomfield, Colo.-based SCL Health has an “AA-” rating and stable outlook with Fitch and an “Aa3” rating and stable outlook with Moody’s. The system has a track record of exceptional operations, consistent improvement in unrestricted liquidity levels and significant financial flexibility, Fitch said. The credit rating agency said SCL Health is well positioned to manage the pressures of COVID-19, having built up cash reserves.

7. San Diego-based Scripps Health has an “AA” rating and stable outlook with Fitch and an “Aa3” rating and stable outlook with Moody’s. The health system has a strong balance sheet, strong operations and has maintained a low leverage position, Fitch said. The credit rating agency expects Scripps will continue generating operating levels that are consistent with historical trends following recovery from the pandemic.

8. San Diego-based Sharp HealthCare has an “Aa3” rating and stable outlook with Moody’s and an “AA” rating and stable outlook with S&P. The health system has a healthy financial profile, an excellent balance sheet, a solid business position and is the leading provider in a competitive service area, S&P said. The credit rating agency said the system’s financial performance has remained stable despite COVID-19 and the recession.