63 financial benchmarks for hospital executives

Hospital 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 63 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 2016 Medians" report, August 2017.

The medians are based on an analysis of audited 2016 financial statements for 323 freestanding hospitals, single-state health systems and multistate 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: 65.4 percent

2. Operating margin: 2.7 percent

3. Excess margin: 5.6 percent

4. Operating cash flow margin: 9.3 percent

5. Return on assets: 4.1 percent

6. Three-year operating revenue CAGR: 6.5 percent

7. Three-year operating expense CAGR: 6.2 percent

8. Days cash on hand: 204.7

9. Annual operating revenue growth rate: 6 percent

10. Annual operating expense growth rate: 7.2 percent

11. Total debt-to-capitalization: 34.9 percent

12. Total debt-to-total operating revenue: 34.6 percent

13. Current ratio: 2.0x

14. Cushion ratio: 20.9x

15. Annual debt service coverage: 5.1x

16. Maximum annual debt service coverage: 4.6x

17. Debt-to-cash flow: 2.8x

18. Capital spending ratio: 1.2x

19. Accounts receivable: 47.8 days

20. Average payment period: 62.8 days

21. Average age of plant: 11.2 years

Hospital margins by credit rating group

Source: S&P Global Ratings "U.S. Not-For-Profit Health Care System Median Financial Ratios — 2016 vs. 2015" report, August 2017.

AA+ rating

22. Operating margin: 4 percent

23. Operating EBIDA margin: 11.6 percent

24. Excess margin: 6.5 percent

25. EBIDA margin: 13.3 percent

AA rating

26. Operating margin: 4.8 percent

27. Operating EBIDA margin: 11 percent

28. Excess margin: 6.6 percent

29. EBIDA margin: 12.7 percent

AA- rating

30. Operating margin: 3.3 percent

31. Operating EBIDA margin: 9.6 percent

32. Excess margin: 4.4 percent

33. EBIDA margin: 10.8 percent

A+ rating

34. Operating margin: 2.3 percent

35. Operating EBIDA margin: 9 percent

36. Excess margin: 3.7 percent

37. EBIDA margin: 10 percent

A rating

38. Operating margin: 2 percent

39. Operating EBIDA margin: 7.8 percent

40. Excess margin: 2.9 percent

41. EBIDA margin: 8.8 percent

A- rating

42. Operating margin: 2.3 percent

43. Operating EBIDA margin: 9.4 percent

44. Excess margin: 2.9 percent

45. EBIDA margin: 9.5 percent

BBB+ rating

46. Operating margin: 0 percent

47. Operating EBIDA margin: 5.7 percent

48. Excess margin: 1 percent

49. EBIDA margin: 7.2 percent

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 — 2016 vs. 2015" report, August 2017.

AA+ rating

50. Days cash on hand: 398.8

51. Days in accounts receivable: 49.7

AA rating

52. Days cash on hand: 316.1

53. Days in accounts receivable: 51

AA- rating

54. Days cash on hand: 220.4

55. Days in accounts receivable: 47.7

A+ rating

56. Days cash on hand: 183.7

57. Days in accounts receivable: 47.9

A rating

58. Days cash on hand: 174.2

59. Days in accounts receivable: 48.5

A- rating

60. Days cash on hand: 148.5

61. Days in accounts receivable: 44.3

BBB+ rating

62. Days cash on hand: 155.9

63. Days in accounts receivable: 43.9

More articles on healthcare finance:

CMS releases proposed physician payment rule for 2019: 6 things to know
Why a Missouri hospital can't afford accounting help after a 2,353% spike in revenue
9 hospital closures in 2018 so far

 

© Copyright ASC COMMUNICATIONS 2021. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.