50 statistics and benchmarks for CFOs to know

Here are 50 statistics and benchmarks for hospital and health system CFOs to know.

Key finance statistics

Source: Moody's Investors Service, "Preliminary U.S. Not-for-Profit and Public Hospital 2014 Medians: Growth in Hospital Revenue Edges Ahead of Expenses in 2014," May 2015.

Note: The preliminary medians are based on FY 2014 audited financial statements representing 48 percent of Moody's rated portfolio. These medians primarily reflect audit year ends of Sept. 30, 2014 and prior.

1. Annual median revenue. The preliminary fiscal year 2014 U.S. nonprofit and public hospital medians show a rise in annual median revenue growth to 4.7 percent, up from the all-time low of 3.9 percent in FY 2013, with total operating revenue at $679,912,000.

"Revenue growth was supported by continued consolidation in the nonprofit hospital sector and the initial influence of the Affordable Care Act as benefits of the exchanges and Medicaid expansion were realized," said Beth Wexler, Moody's vice president and senior credit officer.

2. The annual expense growth rate declined to 4.6 in FY 2014 from 5 percent FY 2013 and 5.5 percent in FY 2012. The slowdown in the expense growth rate is attributable to the ongoing shift of patient care to lower-cost and more efficient settings, such as outpatient and ambulatory surgery centers, in addition to operating efficiencies gained from increasing size and scale.

3. The median cash on hand rose to 212 days in FY 2014. That's up from 207 days in 2013 and up 197 days in 2012.

4. Unrestricted cash and investments were $377 million in FY 2014, up $20 million from FY 2013, mostly due to solid equity gains and restrained capital spending.

5. Profitability margins stabilized in 2014, though the 2.2 percent operating margin and 9.2 percent operating cash flow margins are down from higher levels in 2012.

6. Median net patient revenues: $588,190,000

Average cost per inpatient day

Source: 2015 data is from 2013 by Kaiser State Health Facts

7. State/local government hospitals: $1,878

8. Nonprofit hospitals: $2,289

9. For-profit hospitals: $1,791

Key ratios: Preliminary medians in 2014

Source: Moody's Investors Service, "Preliminary U.S. Not-for-Profit and Public Hospital 2014 Medians: Growth in Hospital Revenue Edges Ahead of Expenses in 2014," May 2015

Note: The preliminary medians are based on FY 2014 audited financial statements representing 48 percent of Moody's rated portfolio. These medians primarily reflect audit year ends of Sept. 30, 2014 and prior.

10. Excess margin: 5.3 percent

11. Return on assets: 4.3 percent

12. Cash-to-direct debt ratio: 157.2 percent

13. Cash-to-comprehensive debt ratio: 111 percent 

14. Debt-to-capitalization ratio: 32.4 percent

15. Debt-to-total operating revenue: 35.2 percent

16. Annual operating revenue growth rate: 4.7 percent

17. Annual debt service coverage: 4.9x

18. Maximum annual debt service coverage: 4.5x

19. Debt-to-cash flow: 3.1x

20. Capital spending ratio: 1.1x

21. Accounts receivable: 51.1 days

22. Average payment period: 63.7 days 

Patient revenue sources by gross revenue

23. Medicare: 44.7 percent

24. Medicaid: 13.2 percent

25. Commercial: 32.5 percent

26. Self-pay and other: 7.5 percent

Hospital prices and uncompensated care

27. Overall hospital prices were 0.7 percent higher in May 2015 than May 2014, according to the Bureau of Labor Statistics. Additionally, hospital prices increased by 0.1 percent between April and May.

28. Uncompensated care costs at U.S. hospitals fell by an estimated $7.4 billion in 2014 due to the expansion of healthcare coverage under the Patient Protection and Affordable Care Act, according to HHS' Office of the Assistant Secretary for Planning and Evaluation.

29. ASPE estimated hospitals' uncompensated care costs would have been $34.7 billion in 2014 if the uninsured rate had remained at its 2013 level. However, actual uncompensated care costs for 2014 were an estimated $27.3 billion.

30. The majority of the estimated savings ($5 billion) came from states that expanded Medicaid, representing a 26 percent reduction in uncompensated care costs in those states. There was also an estimated $5.5 billion reduction in charity care costs at hospitals across the country in 2014, according to the report.

Compensation statistics

31. Total cash compensation levels for hospital executives decreased an average of 0.4 percent in 2014, according to Sullivan, Cotter and Associates'  "2014 Manager and Executive Compensation in Hospitals and Health Systems Survey."

32. Compensation levels for health system executives increased by 0.9 percent in 2014 due to lower average payouts under annual incentive plans. 

33. The average base salary for an independent health system CEO in 2014 was $752,800, and the average base salary for an independent hospital CEO was $425,200, according to Integrated Healthcare Strategies' "2014 National Healthcare Leadership Compensation Survey" report.*

34. The average base salary for an independent health system CFO in 2014 was $416,200, and the average base salary of an independent hospital CFO was $247,900, according to Integrated Healthcare Strategies' "2014 National Healthcare Leadership Compensation Survey" report.*

35. The average annual salary for a CIO in healthcare and medical services in 2015 is $173,941.

36. The average annual salary for a CXO in 2015 is $221,000

37. Base salaries increased between 2013 and 2014 across the board for many C-suite positions, according to the Sullivan, Cotter and Associates survey. However, CEOs at independent hospitals saw the largest average base salary increase (6.4 percent) between 2013 and 2014.

38. The average base salary increases between 2013 and 2014 for executives of health systems are as follows:

CEO — 2.6 percent

COO — 2.9 percent

CFO — 3.5 percent

CMO — 2.5 percent

39. At independent hospitals, base salaries increased by the following percentages:

CEO — 6.4 percent

COO — 4.5 percent

CFO — 2.1 percent

CMO — 4.9 percent

40. At system-owned hospitals, base salaries increased by the following percentages:

CEO — 1.7 percent

COO — 1.7 percent

CFO — 2.5 percent

CMO — 1.7 percent

41. Health systems offered the following median target award opportunities to their executives in 2014, according to the Sullivan Cotter Associates survey:

CEO — 35 percent (up from 31 percent in 2004)

COO — 30 percent (up from 25 percent)

CFO — 28 percent (up from 24 percent)

SVP — 25 percent (up from 23 percent)

VP — 20 percent (up from 19 percent)

42. Hospitals offered their executives the following median target award opportunities in 2014:

CEO — 30 percent (up from 28 percent)

COO — 25 percent (up from 22 percent)

CFO — 25 percent (up from 22 percent)

SVP — 20 percent (down from 24 percent)

VP — 17 percent (down from 19 percent)

43. Healthcare executive compensation is adapting to new leadership competencies. According to a B.E. Smith whitepaper, as hospitals and health systems attempt to adapt to the new leadership realities — such as increased CEO turnover and merger and acquisition activity — executive compensation in the healthcare industry rose 2 percent to 3 percent over the past year, with slightly higher pay raises for CEOs.

44. Although the industry is moving to align executive compensation with performance-based care models, 43 percent of executives surveyed said their organization hasn't taken steps to match incentives to values such as cost containment and clinical outcomes. However, further alignment will occur in 2015, according to the report.

45. Forty percent of survey respondents said their executive compensation packages are either slightly or seriously misaligned with their organization's strategies, according to the 2014 Executive Compensation Survey report by HealthLeaders Media Intelligence. As for incentive payments, operating margins serve as a basis for 60 percent of respondents' current team incentive payments, followed by clinical performance targets (59 percent) and staff engagement or satisfaction targets (51 percent).

Medicare and Medicaid payments

Source: American Hospital Association Underpayment by Medicare and Medicaid Fact Sheet 2015

46. Combined underpayments were $51 billion in 2013, the latest year for which data is available. This includes a shortfall of $37.9 billion for Medicare and $13.2 billion for Medicaid.

47. Hospitals received payment of only 88 cents for every dollar spent by hospitals caring for Medicare patients in 2013. For Medicaid, hospitals received payment of only 90 cents for every dollar spent by hospitals caring for Medicaid patients.

48. In 2013, 65 percent of hospitals received Medicare payments less than cost, while 62 percent of hospitals received Medicaid payments less than cost.

M&A activity

49. Moody's Investors Service predicts merger and acquisition activity will grow and remain elevated for at least two years as financially distressed nonprofit hospitals seek solace in consolidation to avoid payment default.

50. Small hospitals with revenues of $500 million or less are most likely to be affected, according to Moody's. These providers are facing increasing regulatory and financial changes, leading to increased consolidation with larger, often for-profit hospital operators, which have been buffered from change by economies of scale. Nonprofit hospitals have declined from 80 percent market penetration in 1999 to 73 percent penetration in 2003, and, M&A volume in the first quarter of 2015 and fourth quarter of 2014 show the first significant transaction growth since 2012.

*"Independent" refers to a system or hospital that does not report to a parent.

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