65 financial benchmarks for hospital executives

Hospitals leaders across the nation use benchmarking as a way to determine the areas of their business that need improvement. The continuous process of benchmarking allows hospital executives to see how their organizations stack up against local and regional competitors as well as national leaders.

Here are 65 benchmarks related to one of the most important day-to-day areas hospital executives oversee — finance.

Key ratios
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.

1. Maintained bed occupancy: 64.3 percent

2. Operating margin: 3.4 percent

3. Excess margin: 6.1 percent

4. Operating cash flow margin: 10.3 percent

5. Return on assets: 4.8 percent

6. Three-year operating revenue CAGR: 5.8 percent

7. Three-year operating expense CAGR: 5.5 percent

8. Annual operating revenue growth rate: 7.5 percent

9. Annual operating expense growth rate: 6.6 percent

10. Total debt-to-capitalization: 33.7 percent

11. Current ratio: 2.0x

12. Cushion ratio: 20.6x

13. Annual debt service coverage: 5.2x

14. Maximum annual debt service coverage: 4.8x

15. Debt-to-cash flow: 2.7x

16. Capital spending ratio: 1.1x

17. Cash on hand: 211.8 days

18. Accounts receivable: 48.4 days

19. Average payment period: 64.3 days

20. Average age of plant: 11 years

Hospital adjusted expenses per inpatient day
Source: Kaiser State Health Facts

These figures, which are based on information from the 2015 American Hospital Association Annual Survey, include all operating and nonoperating expenses for registered U.S. community hospitals, defined as public, nonfederal, short-term general and other hospitals. The figures are an estimate of the expenses incurred in a day of inpatient care and have been adjusted higher to reflect an estimate of the volume of outpatient services, according to the Kaiser Family Foundation. 

21. State/local government hospitals — $2,013

22. Nonprofit hospitals — $2,413    

23. For-profit hospitals — $1,831

Days cash on hand and days in accounts receivable by credit rating group
Source: S&P Global Ratings "U.S. Not-For-Profit Health Care System Median Financial Ratios — 2015 vs. 2014" report, September 2016.

S&P Global Ratings has outstanding ratings on 156 health systems of which 142 are included in the median ratios.

AA+ rating
24. Days cash on hand: 426.2 days
25. Days in accounts receivable: 45.8 days

AA rating
26. Days cash on hand: 292.9 days
27. Days in accounts receivable: 49.9 days

AA- rating
28. Days cash on hand: 258.2 days
29. Days in accounts receivable: 48.8 days

A+ rating
30. Days cash on hand: 200.3 days
31. Days in accounts receivable: 46.2 days

A rating
32. Days cash on hand: 182.5 days
33. Days in accounts receivable: 49.1 days

A- rating
34. Days cash on hand: 156.6 days
35. Days in accounts receivable: 46.2 days

BBB+ rating
36. Days cash on hand: 148.7 days
37. Days in accounts receivable: 47.6 days

Hospital margins by credit rating group
Source: S&P Global Ratings "U.S. Not-For-Profit Health Care System Median Financial Ratios — 2015 vs. 2014" report, September 2016.

AA+ rating
38. Operating margin: 6.2 percent
39. Operating EBIDA margin: 13.1 percent
40. Excess margin: 8.4 percent
41. EBIDA margin: 14.8 percent

AA rating
42. Operating margin: 4.9 percent
43. Operating EBIDA margin: 10.6 percent
44. Excess margin: 7.2 percent
45. EBIDA margin: 13.3 percent

AA- rating
46. Operating margin: 3.5 percent
47. Operating EBIDA margin: 10.4 percent
48. Excess margin: 6.4 percent
49. EBIDA margin: 12.7 percent

A+ rating
50. Operating margin: 4.1 percent
51. Operating EBIDA margin: 10.3 percent
52. Excess margin: 5.6 percent
53. EBIDA margin: 12.3 percent

A rating
54. Operating margin: 3.6 percent
55. Operating EBIDA margin: 10.6 percent
56. Excess margin: 5.2 percent
57. EBIDA margin: 11.1 percent

A- rating
58. Operating margin: 2.9 percent
59. Operating EBIDA margin: 9.5 percent
60. Excess margin: 3.9 percent
61. EBIDA margin: 10.8 percent

BBB+ rating
62. Operating margin: 0.8 percent
63. Operating EBIDA margin: 6.8 percent
64. Excess margin: 3.4 percent
65. EBIDA margin: 8.7 percent

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