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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