Moody's: 100 Statistics on Children's Hospital Medians

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Acute-care children's hospitals have more credit strengths than adult hospitals because of their limited competition, advanced fundraising initiatives and generally large investment portfolios. However, that does not mean children's hospitals will not endure revenue challenges in the near- and long-term future.

Today, Moody's Investors Service issued a report detailing the different financial metrics of its rated children's hospitals for fiscal year 2011. Moody's rates the $7 billion of debt for 22 pediatric hospitals, most of which have credit ratings of "A" or higher. Per historical norms, children's hospitals continued to post solid balance sheet metrics in fiscal year 2011, especially compared with adult hospitals.

Median days cash on hand for children's hospitals was 316 in FY 2011, which almost doubled the median of 165 for adult hospitals in 2011. Children's hospitals also posted high medians in cash-to-debt ratio (192 percent), operating margin (6.1 percent) and operating cash flow margin (12.9 percent).

However, the revenue growth rate between children's hospitals and adult hospitals is shrinking. In FY 2007, the median growth rate for children's hospitals surpassed adult hospitals by almost 3 percentage points. Last year, the gap narrowed to only a 0.7 percent difference.

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The biggest reasons for these revenue challenges included reductions in Medicaid payments, the impact of healthcare reform to disproportionate share funds, declines in commercial payor reimbursements and a growing scrutiny of prices.

"Like adult hospitals, children's hospitals will face cuts in disproportionate share funding," Lisa Martin, senior vice president at Moody's and lead author of the report, said in a news release. "However, children's hospitals will not benefit as much as adult hospitals from more insured patients that health reform should bring because a larger proportion of children are already insured through Medicaid or the Children's Health Insurance Program."

Here are 100 statistics on children's hospital medians from Moody's report. To give a longer time span of comparison, medians are given from FY 2007 and FY 2011.

Note: The following median data are based on audited financial statements for 22 hospitals within Moody's database. All data is as of Oct. 8, 2012. To compare pediatric hospitals and health systems to adult, acute-care hospitals and health systems, click here.

Utilization


Category

FY 2007

FY 2011

Maintained beds

265

309

Admissions

13,132

13,265

Patient days

75,163

79,689

Average length of stay

6 days

6.1 days

Maintained bed occupancy

77.6 percent

72.7 percent

Emergency room visits

61,766

64,627

Outpatient visits

209,345

314,820

Outpatient surgeries

10,055

11,746



Financial performance


Category

FY 2007

FY 2011

Net patient revenues

$394.4 million

$555.3 million

Total operating revenue

$479.4 million

$675.2 million

Interest expense

$6.9 million

$7.8 million

Depreciation and amortization expense

$26.2 million

$32.1 million

Total operating expenses

$474.6 million

$668 million

Income from operations

$27 million

$45.4 million

Excess of revenue over expenses

$46.9 million

$75.6 million

Net revenue available for debt service

$71.3 million

$125.6 million

Operating cash flow

$51.1 million

$94.7 million

Debt service

$10.7 million

$16.4 million

Additions to property, plan & equipment

$45 million

$60.9 million



Balance sheet


Category

FY 2007

FY 2011

Unrestricted cash and investments

$352.2 million

$457.2 million

Restricted cash and investments

$166.3 million

$149.7 million

Net fixed assets

$292 million

$490.5 million

Total debt

$184.3 million

$301.3 million

Unrestricted net assets

$534.3 million

$707.9 million

Total comprehensive debt

$184.5 million

$367.8 million



Key ratios


Category

FY 2007

FY 2011

Operating margin

5 percent

6.1 percent

Excess margin

8.9 percent

10.5 percent

Operating cash flow margin

11.1 percent

12.9 percent

Return on assets

5.9 percent

6.2 percent

Annual debt service coverage

8.4x

8.1x

Maximum annual debt service coverage

6.3x

6.7x

Current ratio

2.2x

1.7x

Cash on hand

275.6 days

315.5 days

Cushion ratio

30x

28.9x

Cash-to-debt ratio

185.3 percent

191.6 percent

Accounts receivable

52 days

47.2 days

Average payment period

67.3 days

74 days

Debt-to-capitalization ratio

26.8 percent

27.7 percent

Debt-to-cash flow

2.7x

2.3x

Bad debt as a percent of net patient revenue

2.9 percent

2 percent

Average age of plant

8.7 years

7.6 years

Capital spending ratio

2.5x

1.3x

Debt-to-total revenue

45.8 percent

41.2 percent

Three-year operating revenue CAGR

9.9 percent

6.7 percent

Cash-to-total comprehensive debt

178.2 percent

146.7 percent



Patient revenue sources by gross revenue


Category

FY 2007

FY 2011

Medicaid

48 percent

53 percent

Blue Cross

19.1 percent

16.6 percent

Commercial

2.2 percent

1.9 percent

Managed care

33.6 percent

29.6 percent

Self-pay and other

6 percent

4 percent



More Articles on Hospital Finance:

200 Hospital Benchmarks

Sifting Through the Data: 5 Things to Decipher From S&P's 2011 Hospital Medians

Moody's: 118 Statistics on Non-Profit Hospital Medians

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