Nonprofit hospital revenue growth exceeds expense growth for first time in 3 years, Moody's finds

The nonprofit hospital median operating revenue growth rate reached 5.5 percent in fiscal year 2018, topping the 5.4 percent expense growth rate for that period, according to data from Moody's Investors Service.

The rating agency said this marks the first time in three years that operating revenue growth has outpaced expense growth, although the operating revenue growth rate was still low compared to the 7.8 percent peak in fiscal year 2015.

"Revenue growth remained a major hurdle as hospitals faced ongoing reimbursement challenges and weak inpatient volume growth relative to outpatient visits," the Moody's report stated. "Reimbursement difficulties were underscored by a reported decline in commercial revenue as a percent of gross revenue, while reliance on less lucrative Medicare increased."

Three other report insights:

  • The nonprofit hospital median operating margin reached 1.8 percent in fiscal year 2018.
  • The nonprofit hospital median days cash on hand was 200.9 days in fiscal year 2018, down from 206.6 days in the year prior.
  • The nonprofit median growth rate in combined inpatient admissions and observation stays decreased from 1.7 percent in fiscal year 2017 to 1.1 percent in fiscal year 2018.


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