Children's hospitals boost outperformance vs. adult care

Children's hospitals in the U.S. not only outperformed their adult care counterparts in 2022 on a number of metrics, including superior revenue growth, but also widened the traditional gap, Moody's reported Sept. 8.

While the median operating revenue growth rate at adult care systems was 5.1 percent, it totaled 10.1 percent at children's hospitals. Such a gap, which has historically been the case, widened in fiscal 2022, largely driven by a faster rebound in demand, a better payer mix and a larger portion of inpatient versus outpatient revenue, according to the report.

Other comparative metrics to note included:

  • Median operating cash flow margin of 10.4 percent vs. 4.9 percent in adult care.
  • Median days' cash on hand was 416, more than double the 206 equivalent in adult care.
  • Operating margin median of 4.2 percent versus -0.3 percent adult care margin.
  • Total debt to cash flow of 2.5x vs. 3.6x for adult care.

Moody's also raised a couple of notes of caution. While such metrics did increase the gap between children's hospital performance versus their adult care counterparts, many of the metrics remained below pre-pandemic levels.

Also, children's hospitals have a much higher reliance on Medicaid reimbursements, with a median of 54.3 percent of gross revenue compared with 16.6 percent for adult hospitals. 

"The risk of cuts in the joint federal/state program is the greatest vulnerability facing children's hospitals," the report noted.

The data was based on 23 children's hospitals across the country.

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