Fitch: Nonprofit Hospital Liquidity Metrics Improved in 2012

Several balance sheet liquidity metrics at nonprofit hospitals and health systems — including days cash on hand, cushion ratio and cash-to-debt ratio — improved from 2011 to 2012, but those positive financial outcomes are likely to be compressed after this year's numbers are calculated, according to a report from Fitch Ratings.

FitchFitch analysts released their median ratios for 249 nonprofit hospitals and health systems. Their findings are similar to those of Standard & Poor's Ratings Services. Last week, S&P also said median ratios at nonprofit health systems and standalone hospitals were positive last year, but those figures are expected to "soften gradually" going into 2014 due to the pressures associated with healthcare reform.

According to Fitch's analysis, hospitals had a median of 183.9 days cash on hand in 2012. The median cushion ratio was 14.6x, while cash-to-debt stood at 119.3 percent. The average operating margin among Fitch's rated hospitals was 3 percent, while the average operating EBITDA margin was 10.3 percent.

Through the first half of fiscal year 2013, though, Fitch has already seen weaker volumes and financial pressures among its hospital portfolio. This has led to a 2-to-1 downgrade-to-upgrade ratio through mid-July. Fitch also expects downgrades to outpace upgrades for the last half of this fiscal year, mostly among hospitals and health systems in the "BBB" rating category and below.

More Articles on Hospital Financial Metrics:
S&P: 34 Statistics on Nonprofit Health System Medians
Fitch: Children's Hospitals Well-Positioned to Handle Reform
Moody's: 118 Statistics on Non-Profit Hospital Medians

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