Hospitals saw cash on hand increase by 44 days in fiscal 2020, Moody's data shows

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Hospitals saw substantially higher days cash on hand in fiscal year 2020, primarily due to Medicare advance payments, the deferral of payroll taxes, halted capital projects and a suspension of retirement contributions, according to a report from Moody's Investors Service released March 25.

Hospitals saw their days cash on hand increase by 44 days, to 246.9, in fiscal 2020. Moody's said the Medicare advance payments equated to 30 to 40 days of the growth. 

However, despite the increase in cash on hand, hospitals saw their profits decline in fiscal 2020 because of the COVID-19 pandemic. 

Hospitals generated a median operating margin of 0.5 percent and operating cash flow margin of 6.7 percent in fiscal 2020. This compares to a 2.4 percent operating margin and 8.4 percent cash flow margin in fiscal 2019. 

Moody's said that the Coronavirus, Aid, Relief and Economic Security Act funding represented a median 43 percent of hospitals' operating cash flow in fiscal 2020. 

Despite leadership efforts to cut costs, expense growth still outpaced revenue growth in fiscal 2020. Median operating expenses grew 4.7 percent, compared to a 3 percent revenue growth. 

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