U.S. not-for-profit healthcare providers showed remarkable improvements to acute healthcare medians in 2021 compared to 2020, despite challenges presented by multiple surges of COVID-19 and a significant labor shortage, according to an Aug. 24 analysis from S&P Global Ratings.
The trend underscores the demand for services and the resiliency of management teams focused on financial performance and balance sheet preservation in addition to managing a challenging clinical environment.
Key takeaways from the analysis include:
- The 2021 fiscal medians are the strongest in nearly a decade despite operational and financial volatility over the past two years.
- COVID-19 relief funding significantly supported financial performance and unrestricted reserves. The report notes that performance would have been considerably weaker without this support.
- Steady volume recovery contributed to net patient service revenue rebounding in 2021 after a decline in 2020, while total operating revenue continued to grow.
- Strengthening balance sheets lends stability, as almost all balance sheet ratios improved throughout 2021 after a healthy year of investment performance paired with management actions to preserve funds and the receipt of material government support.
- Expense and macroeconomic pressures are expected to affect future performance as wage, and inflationary pressures escalate and will likely cause a drag on performance for the remainder of 2022 and going into 2023.