Tag Archives: Operating Performance
5 hospitals with strong finances
http://www.beckershospitalreview.com/finance/5-hospitals-with-strong-finances-september22.html
Here are five hospitals and health systems with strong operational metrics and solid financial positions based on recent reports from Moody’s Investors Service, Fitch Ratings and S&P Global Ratings.
Note: This is not an exhaustive list. Health system names were compiled from recent credit rating reports. Systems are listed in alphabetical order.
Dignity faces losses, liabilities and growing competition
The area’s third-largest private-sector employer faces financial challenges that could lead to cuts in its local workforce of 7,800, observers say
Troubled hospital giant CHS looking to sell its business
Earlier this month, Modern Healthcare reported that CHS plans to sell more than the 12 hospitals it has for sale, quoting CFO Larry Cash speaking at the Wells Fargo Securities Healthcare Conference in Boston.
Cash said they are getting interest in additional hospitals. And after examining its portfolio of 159 hospitals, it likely will see “other transactions” before the end of the year, he said.
The hospitals previously up for sale will likely be sold as part of five transactions. Not-for-profit hospital systems are among the prospective buyers, he said.
CHS is not disclosing which hospitals it is negotiating to sell. But the company said that combined, they generate annual revenue of about $1.45 billion and expect to yield net proceeds of $850 million. The proceeds will be used to reduce overall indebtedness, Cash said.
In April, CHS completed the spinoff of 38 mostly small and rural hospitals into a new public company, Quorum Health Corp. That divestiture brought about $1.2 billion in net proceeds, money that also was used to reduce debt.
Plunging earnings complicated by continued low margins at Health Management Associates hospitals that CHS purchased for $3.9 billion in 2014 has caused CHS’ stock price to plummet.
The stock traded at $60 a share a year ago.
CBO: Hospitals’ future finances depend on increasing productivity
- A new analysis from the Congressional Budget Office (CBO) has recognized that changes in laws and regulations, prompted primarily by the ACA–notablyreduced Medicare payment updates and expanded insurance coverage–can be expected to significantly impact hospitals’ future finances.
- To help provide a sense of the impacts, the CBO’s working paper predicted hospitals’ profit margins, and the share of hospitals that could lose money in 2025 under several different scenarios.
- The researchers noted that they provided a wide range of estimates due to “substantial uncertainty” around the predictions and how hospitals will respond to the pressures of the federal healthcare law.
20 financial benchmarks for hospital executives
Here are 20 benchmarks related to one of the most important day-to-day areas hospital executives oversee — finance.
Source: Moody’s Investors Service, “U.S. Not-for-Profit Hospital 2015 Medians” report, September 2016.
The medians are based on an analysis of audited 2015 financial statements for 340 freestanding hospitals, single-state health systems and multi-state health systems, representing 81 percent of all Moody’s rated healthcare entities. Children’s hospitals, hospitals for which five years of data are not available and certain specialty hospitals were not eligible for inclusion in the medians.
Ascension’s expansion efforts pay off as operating surplus swells to $753M
Click to access ES819017-ES642670-.pdf
St. Louis-based Ascension reported $21.9 billion in revenue in fiscal year 2015, up 6.6 percent from revenue of $20.5 billion in the year prior, according to financial documents filed with bondholders.
The financial boost was partially attributable to an increase in patient volume due to Ascension’s expansion efforts in the past year. During the year ended June 30, 2016, Ascension acquired Glendale, Wis.-based Wheaton Franciscan Healthcare and added hospitals in Michigan and Tennessee as well.
Including these recently acquired facilities, the nonprofit system said inpatient admissions and inpatient surgeries increased 3.2 percent and 3.3 percent, respectively, as compared to the year prior. Ascension also said emergency room visits increased 3.7 percent year over year.
After accounting for a year-over-year increase in expenses of 6.1 percent, Ascension ended FY 2015 with an operating surplus of $753.2 million, up from $696.5 million in the year prior.
CBO’s Analysis of Financial Pressures Facing Hospitals Identifies Need for Additional Research on Hospitals’ Productivity and Responses
https://www.cbo.gov/publication/51920
Key Findings and Limitations of This Analysis
Our analysis of hospitals’ profit margins incorporates the effects of the cuts in Medicare’s hospital payment updates specified in the ACA, other reductions in federal payments to hospitals specified in the ACA and in other recent laws, and demographic changes (which will put downward pressure on hospitals’ margins as more patients shift from higher-paying commercial insurance to lower-paying Medicare coverage). The analysis also incorporates the effects of the expansion of insurance coverage under the ACA, which will improve hospitals’ finances by reducing the number of patients who are uninsured. The analysis focuses on about 3,000 hospitals that provide acute care to the general population and are subject to the reductions in Medicare’s payment updates; it thus excludes most rural hospitals and all of Medicare’s “critical access” hospitals.
As a starting point, we estimated that the average profit margin of the hospitals included in the analysis was 6.0 percent in 2011 and that 27 percent of them had negative profit margins (in other words, they lost money) in that year. That share may be surprisingly high but is similar to the shares of hospitals with a negative annual profit margin over the past two decades. Although some hospitals have closed over that period, others have opened, overall access to care remains good (as measured by indicators such as service use and hospital capacity), and the quality of care may have improved.
Value-based Care is Ripping Into Health System Profits
Large health systems and hospital operators are reporting falling profits, revenue, income, and share value. The promise of population health management may eventually restore financial order, says one industry expert.
How some providers are stoking entrepreneurial fires to ensure healthy financials
In an era of falling inpatient rates and value-based reimbursement, hospitals and health systems are seeking new ways to grow their revenue streams. For some, that has meant wearing an entrepreneurial hat and marketing home-grown solutions.
One example is the University of Pittsburgh Medical Center, which two years ago created UPMC Enterprises to develop and commercialize novel technologies.
HENRY KOTULA 