Moody's: Nonprofit hospitals' revenue growth outpacing expense growth

U.S. nonprofit hospitals' preliminary median operating profitability kept steady in fiscal year 2018 after two years of declining revenues, Moody’s Investors Service says in a new report.

“In 2018, nonprofit hospitals saw revenue growth edge ahead of expenses for the first time since 2016 as a result of steady patient volumes, revenue cycle improvements and” mergers and acquisitions, Rita Sverdlik, a Moody’s analyst, said in a news release. “At the same time, cost-cutting initiatives and smaller drug price increases contributed to a slower expense growth rate, while the sector’s debt metrics also slightly improved.”

Six other report takeaways:

1. Median operating revenue growth increased to 5.1 percent in 2018, a slight increase from expense growth of 5 percent.

2. "Revenue growth nonetheless remains below historical levels in the absence of significant growth in patient numbers, low reimbursement increases, and a changing payer mix as an aging population drives Medicare enrollment higher, " Moody's said.

3. Median days cash on hand was 209.7 days in 2018, down from 213.7 days in the year prior.

4. Median cash flow to debt was 172.6 percent last year compared to 169.2 percent in 2017.

5. Median growth in inpatient admissions held flat in 2018, at 1.2 percent, while total admissions (inpatient admissions and observation stays) dropped year over year from 1.8 percent in 2017 to 0.7 percent last year.

6. The median growth rate for outpatient surgeries and outpatient visits was 1.7 percent and 2.4 percent, respectively, in 2018. That's compared to 1.4 percent and 2.3 percent in 2017.

 

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