Rating And Outlook Overview
Number of rated stand-alone hospitals is stable. The number of stand-alone hospitals we rate remained stable year over year at 257, which is in contrast to the decline we saw to fiscal 2021 from fiscal 2020. While we continue to see transitions in the portfolio due to ongoing mergers and acquisitions, as well as a few stand-alone hospitals migrating to the system portfolio, we have also added new issuers to the portfolio in the past year.
Rating distribution continues to resemble a bell curve with a positive skew. The largest proportion of stand-alone hospital ratings are in the 'A' category, followed by the 'BBB' category, which is historically consistent. This contrasts with the rating distribution for health systems, which exhibit significant concentration in the 'A' and 'AA' categories.
Percentage of investment grade ratings is up from prior year but still below pre-pandemic years. The proportion of stand-alone hospitals with investment grade ratings increased to 87% but was still below the 2019 level of 89%. At the same time, we are seeing a larger number of ratings at the higher and lower ends of the rating spectrum relative to pre-pandemic, with the percentage of 'AA' category ratings increasing and the percentage of speculative grade ratings stable, which reflects a growing gap in credit quality on the ends of the rating spectrum.
Outlooks skew negative, but are broadly more stable. The proportion of stable outlooks has increased from the prior year, reflecting resolution of previously elevated negative outlooks following the onset of the pandemic. However, negative outlooks remain higher than positive outlooks, though improved from fiscal 2020 and 2021.
Chart 1
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Key Median Takeaways
Net patient service revenue rebounded from lows in fiscal 2020. Stand-alone hospitals across nearly all rating categories generated more net patient revenue than in 2020 as a result of volume recoveries and good revenue yield. Salaries and benefits as a percentage of net patient revenue was lower across rating categories, but this was likely a function of higher net patient revenue in fiscal 2021 rather than lower salaries and benefits expenses.
Profitability in 2021 was supported by stimulus funds. Operating margin was higher across rating categories, though absent non-recurring items such as CARES and ARPA grants, profits would have been lower than in prior years and even negative for the speculative grade category. Overall, we believe this demonstrated sector resiliency and decent cost containment during the year as providers navigated virus surges.
Unrestricted reserves were mainly higher, nominally and relative to other metrics. Unrestricted reserve growth was due to healthy investment gains and cash flows, which was a key factor supporting our stable sector view entering 2022. We also saw many providers defer capital spending to maintain robust reserve levels. The aggregate level of unrestricted reserves for speculative grade standalone hospitals increased but declined relative to debt, due to sample population changes including withdrawn ratings and some rated stand-alone hospitals transitioning to the investment grade category.
Debt profiles broadly improved. Leverage across rating categories declined as stand-alone hospitals built unrestricted net asset balances. Debt burden metrics were lower as a result of lower cost of capital refinancings as stand-alone hospitals capitalized on lower interest rates, and the denominator of total operating revenue increased across rating categories with stimulus recognition, utilization rebounds, and payer rate increases. Pension funded ratios remained solid as many providers have de-risked plans and benefited from healthy investment returns.
Investment market returns led to healthy non-operating revenue. Favorable realized investment gains and investment income supported coverage metrics, rewarding stand-alone hospitals which received investment portfolio distributions at market highs during 2021. Investment returns offset lagging utilization rebounds for some credits, embodied by higher non-operating revenue as a percentage of total operating revenue for nearly all rating categories. This effect was muted in the speculative grade category in part due to smaller investment portfolios entering the year. The difference between operating EBIDA and EBIDA margins were high, particularly at the higher end of the rating spectrum, with a difference of over 450 basis points at the 'AA+/AA' rating level, which we expect to mean-revert tighter in the next medians publication.
Table 1
| U.S. Not-For-Profit Stand-Alone Hospital Medians By Rating Category--2021 vs. 2020 vs. 2019 | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AA | A | BBB | Speculative grade | |||||||||||||||||||||||
| Fiscal year | 2021 | 2020 | 2019 | 2021 | 2020 | 2019 | 2021 | 2020 | 2019 | 2021 | 2020 | 2019 | ||||||||||||||
| Sample size | 39 | 35 | 38 | 97 | 105 | 108 | 68 | 72 | 73 | 31 | 34 | 30 | ||||||||||||||
| Financial performance | ||||||||||||||||||||||||||
| Net patient revenue ($000s) | 1,121,775 | 985,255 | 1,044,430 | 505,430 | 512,008 | 476,799 | 381,763 | 357,024 | 371,364 | 178,450 | 140,387 | 144,883 | ||||||||||||||
| Total operating revenue ($000s) | 1,456,287 | 1,315,225 | 1,342,510 | 532,808 | 538,531 | 503,032 | 431,818 | 388,937 | 379,264 | 217,105 | 169,704 | 177,971 | ||||||||||||||
| Total operating expenses ($000s) | 1,362,371 | MNR | MNR | 518,839 | MNR | MNR | 413,070 | MNR | MNR | 238,111 | MNR | MNR | ||||||||||||||
| Operating income ($000s) | 53,930 | MNR | MNR | 13,969 | MNR | MNR | 9,289 | MNR | MNR | 4,475 | MNR | MNR | ||||||||||||||
| Operating margin (%) | 5.1 | 3.5 | 4.7 | 3.8 | 1.9 | 2.4 | 2.5 | 0.7 | 0.0 | 1.5 | 1.3 | 0.8 | ||||||||||||||
| Net nonoperating income ($000s) | 55,251 | MNR | MNR | 17,876 | MNR | MNR | 7,922 | MNR | MNR | 1,485 | MNR | MNR | ||||||||||||||
| Excess income ($000s) | 159,152 | MNR | MNR | 38,852 | MNR | MNR | 16,930 | MNR | MNR | 6,228 | MNR | MNR | ||||||||||||||
| Excess margin (%) | 9.8 | 6.7 | 8.1 | 7.2 | 4.1 | 5.1 | 4.6 | 2.5 | 1.7 | 3.1 | 2.6 | 1.5 | ||||||||||||||
| Operating EBIDA margin (%) | 11.0 | 9.8 | 11.1 | 9.3 | 8.3 | 8.9 | 9.0 | 7.3 | 6.8 | 6.7 | 6.8 | 7.0 | ||||||||||||||
| EBIDA margin (%) | 15.6 | 12.6 | 14.3 | 13.0 | 10.3 | 11.2 | 10.6 | 8.4 | 8.1 | 8.8 | 8.4 | 7.9 | ||||||||||||||
| Net available for debt service ($000s) | 242,493 | 163,169 | 197,608 | 76,440 | 52,457 | 54,586 | 45,988 | 32,873 | 30,196 | 17,867 | 14,812 | 14,193 | ||||||||||||||
| Maximum annual debt service ($000s) | 24,237 | MNR | MNR | 13,170 | MNR | MNR | 13,249 | MNR | MNR | 7,340 | MNR | MNR | ||||||||||||||
| Maximum annual debt service coverage (x) | 8.0 | 6.1 | 7.4 | 5.5 | 4.0 | 4.6 | 3.7 | 2.7 | 2.7 | 2.4 | 2.3 | 2.6 | ||||||||||||||
| Operating lease-adjusted coverage (x)* | 6.4 | 4.5 | 5.2 | 4.6 | 3.4 | 3.8 | 3.3 | 2.3 | 2.3 | 2.1 | 2.0 | 2.2 | ||||||||||||||
| Liquidity and financial flexibility | ||||||||||||||||||||||||||
| Unrestricted reserves ($000s) | 1,299,068 | 1,141,448 | 1,031,738 | 424,577 | 391,409 | 310,514 | 183,364 | 182,276 | 169,441 | 56,252 | 43,214 | 38,943 | ||||||||||||||
| Unrestricted days' cash on hand | 423.9 | 354.8 | 334.1 | 308.7 | 295.9 | 260.4 | 185.9 | 171.7 | 158.0 | 112.2 | 111.0 | 89.4 | ||||||||||||||
| Unrestricted reserves/total long-term debt (%) | 370.2 | 292.3 | 286.8 | 243.2 | 218.1 | 222.6 | 148.1 | 134.1 | 112.9 | 78.5 | 93.4 | 76.9 | ||||||||||||||
| Unrestricted reserves/contingent liabilities (%)* | 1,391.7 | 960.8 | 812.5 | 876.5 | 846.0 | 798.4 | 779.6 | 411.4 | 392.1 | 333.9 | 284.0 | 405.2 | ||||||||||||||
| Average age of plant (years) | 11.0 | 11.1 | 10.5 | 12.1 | 11.9 | 11.4 | 13.8 | 13.7 | 13.2 | 14.1 | 13.8 | 13.6 | ||||||||||||||
| Capital expenditures/depreciation and amortization (%) | 123.0 | 126.1 | 116.5 | 107.9 | 114.9 | 116.0 | 86.6 | 86.4 | 103.3 | 79.1 | 74.0 | 66.2 | ||||||||||||||
| Debt and liabilities | ||||||||||||||||||||||||||
| Total long-term debt ($000s) | 342,465 | MNR | MNR | 149,778 | MNR | MNR | 144,730 | MNR | MNR | 81,344 | MNR | MNR | ||||||||||||||
| Long-term debt/capitalization (%) | 18.0 | 21.1 | 19.4 | 23.7 | 25.1 | 25.0 | 35.3 | 35.5 | 35.6 | 47.0 | 48.0 | 50.8 | ||||||||||||||
| Contingent liabilities ($000s)* | 115,873 | MNR | MNR | 52,363 | MNR | MNR | 35,805 | MNR | MNR | 10,000 | MNR | MNR | ||||||||||||||
| Contingent liabilities/total long-term debt (%)* | 23.7 | 27.8 | 32.9 | 26.3 | 26.8 | 28.8 | 18.7 | 27.1 | 29.0 | 13.6 | 16.2 | 9.8 | ||||||||||||||
| Debt burden (%) | 1.9 | 2.1 | 1.9 | 2.4 | 2.7 | 2.5 | 2.8 | 2.9 | 3.0 | 2.9 | 3.5 | 3.5 | ||||||||||||||
| Defined-benefit plan funded status (%)* | 97.5 | 92.5 | 89.7 | 89.3 | 77.1 | 81.8 | 91.6 | 81.9 | 80.0 | 80.3 | 69.6 | 68.3 | ||||||||||||||
| Miscellaneous | ||||||||||||||||||||||||||
| Salaries & benefits/NPR (%) | 58.9 | 61.3 | 57.7 | 55.8 | 58.1 | 55.3 | 57.4 | 59.4 | 57.6 | 56.8 | 60.1 | 55.5 | ||||||||||||||
| Nonoperating revenue/total revenue (%) | 4.7 | 2.6 | 3.1 | 3.5 | 2.2 | 2.3 | 1.7 | 1.2 | 1.2 | 0.8 | 1.0 | 0.8 | ||||||||||||||
| Cushion ratio (x) | 48.7 | 41.5 | 39.4 | 32.0 | 28.1 | 26.2 | 16.7 | 15.8 | 14.3 | 7.8 | 9.7 | 7.0 | ||||||||||||||
| Days in accounts receivable | 54.8 | 49.7 | 51.0 | 48.9 | 44.8 | 47.1 | 44.5 | 44.7 | 48.4 | 44.6 | 45.0 | 49.1 | ||||||||||||||
| Cash flow/total liabilities (%) | 24.8 | 17.9 | 25.2 | 18.3 | 13.9 | 19.3 | 14.1 | 9.2 | 10.1 | 9.6 | 8.0 | 8.6 | ||||||||||||||
| Pension-adjusted long-term debt/capitalization (%)* | 17.5 | 21.7 | 22.6 | 24.9 | 27.3 | 27.7 | 35.3 | 37.1 | 38.2 | 47.1 | 52.0 | 53.4 | ||||||||||||||
| Adjusted operating margin (%)** | 3.0 | MNR | MNR | 0.8 | MNR | MNR | 0.1 | MNR | MNR | (0.9) | MNR | MNR | ||||||||||||||
| MNR--median not reported. *These ratios are only for organizations that have defined-benefit pension plans, operating leases, or contingent liabilities. **Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to COVID-19 stimulus funds recognized, but could comprise other nonrecurring items. | ||||||||||||||||||||||||||
Table 2A
| U.S. Not-For-Profit Stand-Alone Hospital Medians By Rating Level--2021 vs. 2020 vs. 2019 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AA+/AA*** | AA- | |||||||||||||
| Fiscal year | 2021 | 2020 | 2019 | 2021 | 2020 | 2019 | ||||||||
| Sample size | 11 | 11 | 12 | 28 | 24 | 26 | ||||||||
| Financial performance | ||||||||||||||
| Net patient revenue ($000s) | 1,348,121 | 1,212,109 | 1,459,482 | 943,415 | 881,434 | 926,302 | ||||||||
| Total operating revenue ($000s) | 2,194,482 | 1,965,180 | 1,873,172 | 994,416 | 984,770 | 1,019,281 | ||||||||
| Total operating expenses ($000s) | 1,815,681 | MNR | MNR | 996,608 | MNR | MNR | ||||||||
| Operating income ($000s) | 191,289 | MNR | MNR | 48,200 | MNR | MNR | ||||||||
| Operating margin (%) | 7.1 | 6.1 | 5.6 | 3.6 | 3.0 | 4.3 | ||||||||
| Net nonoperating income ($000s) | 103,273 | MNR | MNR | 47,279 | MNR | MNR | ||||||||
| Excess income ($000s) | 292,745 | MNR | MNR | 107,381 | MNR | MNR | ||||||||
| Excess margin (%) | 11.6 | 9.0 | 8.5 | 9.3 | 6.2 | 7.9 | ||||||||
| Operating EBIDA margin (%) | 14.8 | 12.4 | 11.7 | 9.7 | 8.7 | 11.0 | ||||||||
| EBIDA margin (%) | 19.3 | 14.9 | 14.5 | 14.0 | 12.6 | 14.2 | ||||||||
| Net available for debt service ($000s) | 411,003 | 238,224 | 308,793 | 175,225 | 134,766 | 149,061 | ||||||||
| Maximum annual debt service ($000s) | 57,134 | MNR | MNR | 21,054 | MNR | MNR | ||||||||
| Maximum annual debt service coverage (x) | 8.8 | 5.3 | 7.8 | 7.8 | 6.1 | 7.3 | ||||||||
| Operating lease-adjusted coverage (x)* | 7.0 | 4.4 | 5.2 | 6.2 | 4.5 | 5.3 | ||||||||
| Liquidity and financial flexibility | ||||||||||||||
| Unrestricted reserves ($000s) | 1,730,552 | 1,303,236 | 1,261,462 | 1,073,707 | 906,282 | 815,807 | ||||||||
| Unrestricted days' cash on hand | 568.0 | 452.5 | 420.2 | 403.9 | 347.7 | 319.9 | ||||||||
| Unrestricted reserves/total long-term debt (%) | 408.7 | 322.6 | 359.5 | 347.6 | 279.5 | 254.2 | ||||||||
| Unrestricted reserves/contingent liabilities (%)* | 2,328.2 | 1,763.9 | 2,181.1 | 1,316.1 | 848.3 | 720.9 | ||||||||
| Average age of plant (years) | 10.5 | 11.1 | 10.4 | 12.1 | 11.3 | 11.5 | ||||||||
| Capital expenditures/depreciation and amortization (%) | 159.0 | 180.9 | 122.0 | 101.5 | 114.2 | 116.5 | ||||||||
| Debt and liabilities | ||||||||||||||
| Total long-term debt ($000s) | 589,909 | MNR | MNR | 280,159 | MNR | MNR | ||||||||
| Long-term debt/capitalization (%) | 17.2 | 18.3 | 19.2 | 18.1 | 21.6 | 22.0 | ||||||||
| Contingent liabilities ($000s)* | 155,870 | MNR | MNR | 112,097 | MNR | MNR | ||||||||
| Contingent liabilities/total long-term debt (%)* | 15.5 | 22.6 | 17.8 | 26.8 | 40.6 | 39.1 | ||||||||
| Debt burden (%) | 2.2 | 2.5 | 2.1 | 1.8 | 2.0 | 1.9 | ||||||||
| Defined-benefit plan funded status (%)* | 97.4 | 86.5 | 89.9 | 97.5 | 94.3 | 89.5 | ||||||||
| Miscellaneous | ||||||||||||||
| Salaries & benefits/NPR (%) | 59.4 | 67.5 | 62.7 | 58.7 | 58.0 | 56.7 | ||||||||
| Nonoperating revenue/total revenue (%) | 6.4 | 2.1 | 2.5 | 4.2 | 2.8 | 3.2 | ||||||||
| Cushion ratio (x) | 57.9 | 43.6 | 53.8 | 47.1 | 41.4 | 38.5 | ||||||||
| Days in accounts receivable | 56.6 | 52.6 | 50.6 | 47.8 | 47.9 | 51.0 | ||||||||
| Cash flow/total liabilities (%) | 30.3 | 21.1 | 24.0 | 24.2 | 16.8 | 26.4 | ||||||||
| Pension-adjusted long-term debt/capitalization (%)* | 17.4 | 21.6 | 20.2 | 18.1 | 21.9 | 22.9 | ||||||||
| Adjusted operating margin (%)** | 5.3 | MNR | MNR | 2.2 | MNR | MNR | ||||||||
| MNR--median not reported. *These ratios are only for organizations that have defined-benefit pension plans, operating leases, or contingent liabilities. **Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to COVID-19 stimulus funds recognized, but could comprise other nonrecurring items. ***Includes 10 'AA' and one 'AA+' rated hospitals in 2021, 10 'AA' and one 'AA+' rated hospitals in 2020, and 10 'AA' and two 'AA+' rated hospitals in 2019. | ||||||||||||||
Table 2B
| U.S. Not-For-Profit Stand-Alone Hospital Medians By Rating Level--2021 vs. 2020 vs. 2019 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| A+ | A | A- | ||||||||||||||||||
| Fiscal year | 2021 | 2020 | 2019 | 2021 | 2020 | 2019 | 2021 | 2020 | 2019 | |||||||||||
| Sample size | 27 | 29 | 33 | 36 | 41 | 37 | 34 | 35 | 38 | |||||||||||
| Financial performance | ||||||||||||||||||||
| Net patient revenue ($000s) | 692,331 | 666,751 | 668,398 | 602,423 | 535,924 | 545,558 | 329,938 | 310,960 | 274,789 | |||||||||||
| Total operating revenue ($000s) | 743,144 | 698,144 | 686,604 | 640,276 | 570,917 | 570,943 | 353,083 | 336,696 | 293,809 | |||||||||||
| Total operating expenses ($000s) | 748,997 | MNR | MNR | 629,929 | MNR | MNR | 345,973 | MNR | MNR | |||||||||||
| Operating income ($000s) | 26,989 | MNR | MNR | 21,041 | MNR | MNR | 7,128 | MNR | MNR | |||||||||||
| Operating margin (%) | 4.7 | 2.1 | 4.1 | 3.3 | 0.6 | 1.5 | 2.8 | 1.6 | 2.2 | |||||||||||
| Net nonoperating income ($000s) | 43,380 | MNR | MNR | 12,047 | MNR | MNR | 11,182 | MNR | MNR | |||||||||||
| Excess income ($000s) | 86,717 | MNR | MNR | 37,894 | MNR | MNR | 19,669 | MNR | MNR | |||||||||||
| Excess margin (%) | 8.7 | 4.8 | 6.4 | 6.3 | 4.0 | 4.2 | 6.7 | 4.1 | 4.0 | |||||||||||
| Operating EBIDA margin (%) | 11.2 | 9.6 | 11.0 | 9.3 | 8.2 | 8.4 | 8.7 | 7.7 | 8.4 | |||||||||||
| EBIDA margin (%) | 14.6 | 11.3 | 12.7 | 11.9 | 10.1 | 10.6 | 12.7 | 10.1 | 10.0 | |||||||||||
| Net available for debt service ($000s) | 126,722 | 82,349 | 89,524 | 74,108 | 52,933 | 54,616 | 50,992 | 33,879 | 29,785 | |||||||||||
| Maximum annual debt service ($000s) | 20,800 | MNR | MNR | 11,602 | MNR | MNR | 9,904 | MNR | MNR | |||||||||||
| Maximum annual debt service coverage (x) | 6.7 | 4.7 | 5.7 | 5.4 | 3.7 | 4.1 | 5.0 | 3.5 | 3.7 | |||||||||||
| Operating lease-adjusted coverage (x)* | 5.5 | 4.0 | 4.3 | 4.6 | 3.1 | 3.4 | 4.1 | 3.2 | 3.1 | |||||||||||
| Liquidity and financial flexibility | ||||||||||||||||||||
| Unrestricted reserves ($000s) | 814,989 | 693,315 | 588,305 | 366,387 | 391,409 | 306,820 | 309,649 | 245,734 | 200,688 | |||||||||||
| Unrestricted days' cash on hand | 387.3 | 337.1 | 311.0 | 261.3 | 272.5 | 245.5 | 301.6 | 267.9 | 237.1 | |||||||||||
| Unrestricted reserves/total long-term debt (%) | 302.9 | 263.2 | 273.7 | 224.3 | 205.6 | 184.8 | 210.7 | 207.3 | 196.1 | |||||||||||
| Unrestricted reserves/contingent liabilities (%)* | 1,250.8 | 1,083.1 | 971.0 | 812.6 | 782.6 | 605.6 | 646.5 | 997.6 | 872.0 | |||||||||||
| Average age of plant (years) | 11.5 | 10.7 | 9.9 | 12.3 | 11.7 | 11.5 | 12.7 | 12.4 | 12.1 | |||||||||||
| Capital expenditures/depreciation and amortization (%) | 96.3 | 110.0 | 115.3 | 114.7 | 101.9 | 102.7 | 110.8 | 126.0 | 135.8 | |||||||||||
| Debt and liabilities | ||||||||||||||||||||
| Total long-term debt ($000s) | 224,762 | MNR | MNR | 146,634 | MNR | MNR | 118,782 | MNR | MNR | |||||||||||
| Long-term debt/capitalization (%) | 20.6 | 23.8 | 19.9 | 25.0 | 25.7 | 27.4 | 25.3 | 27.1 | 26.9 | |||||||||||
| Contingent liabilities ($000s)* | 60,299 | MNR | MNR | 52,608 | MNR | MNR | 50,280 | MNR | MNR | |||||||||||
| Contingent liabilities/total long-term debt (%)* | 19.4 | 25.3 | 28.2 | 26.3 | 29.7 | 36.0 | 38.3 | 23.4 | 19.2 | |||||||||||
| Debt burden (%) | 2.4 | 2.4 | 2.3 | 2.3 | 2.6 | 2.7 | 2.6 | 2.9 | 2.6 | |||||||||||
| Defined-benefit plan funded status (%)* | 95.8 | 72.1 | 81.9 | 88.6 | 80.7 | 83.6 | 89.3 | 76.9 | 80.7 | |||||||||||
| Miscellaneous | ||||||||||||||||||||
| Salaries & benefits/NPR (%) | 55.5 | 57.4 | 54.7 | 54.5 | 58.9 | 56.2 | 56.7 | 58.0 | 55.3 | |||||||||||
| Nonoperating revenue/total revenue (%) | 5.8 | 2.4 | 2.6 | 2.6 | 2.4 | 2.4 | 2.9 | 2.2 | 2.2 | |||||||||||
| Cushion ratio (x) | 40.0 | 38.7 | 34.7 | 30.5 | 27.5 | 23.1 | 25.5 | 23.3 | 24.2 | |||||||||||
| Days in accounts receivable | 52.0 | 46.6 | 47.9 | 48.0 | 44.5 | 42.8 | 48.2 | 44.4 | 47.5 | |||||||||||
| Cash flow/total liabilities (%) | 23.1 | 15.9 | 23.0 | 16.2 | 12.3 | 17.4 | 18.0 | 13.9 | 16.6 | |||||||||||
| Pension-adjusted long-term debt/capitalization (%)* | 21.0 | 25.1 | 22.8 | 26.9 | 28.2 | 30.1 | 25.7 | 27.8 | 28.9 | |||||||||||
| Adjusted operating margin (%)** | 3.2 | MNR | MNR | 1.3 | MNR | MNR | 0.6 | MNR | MNR | |||||||||||
| MNR--median not reported. *These ratios are only for organizations that have defined-benefit pension plans, operating leases, or contingent liabilities. **Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to COVID-19 stimulus funds recognized, but could comprise other nonrecurring items. | ||||||||||||||||||||
Table 2C
| U.S. Not-For-Profit Stand-Alone Hospital Medians By Rating Level--2021 vs. 2020 vs. 2019 | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BBB+ | BBB | BBB- | Speculative grade | |||||||||||||||||||||||
| Fiscal year | 2021 | 2020 | 2019 | 2021 | 2020 | 2019 | 2021 | 2020 | 2019 | 2021 | 2020 | 2019 | ||||||||||||||
| Sample size | 25 | 25 | 28 | 24 | 25 | 25 | 19 | 22 | 20 | 31 | 34 | 30 | ||||||||||||||
| Financial performance | ||||||||||||||||||||||||||
| Net patient revenue ($000s) | 343,171 | 386,130 | 377,569 | 356,571 | 246,562 | 274,015 | 417,020 | 410,931 | 454,177 | 178,450 | 140,387 | 144,883 | ||||||||||||||
| Total operating revenue ($000s) | 387,875 | 423,312 | 402,771 | 381,585 | 315,900 | 302,589 | 445,803 | 453,536 | 473,209 | 217,105 | 169,704 | 177,971 | ||||||||||||||
| Total operating expenses ($000s) | 375,626 | MNR | MNR | 376,308 | MNR | MNR | 454,729 | MNR | MNR | 238,111 | MNR | MNR | ||||||||||||||
| Operating income ($000s) | 13,254 | MNR | MNR | 7,145 | MNR | MNR | 6,554 | MNR | MNR | 4,475 | MNR | MNR | ||||||||||||||
| Operating margin (%) | 3.4 | 0.7 | 1.5 | 2.2 | 0.0 | (0.4) | 2.0 | 0.8 | (0.2) | 1.5 | 1.3 | 0.8 | ||||||||||||||
| Net nonoperating income ($000s) | 8,942 | MNR | MNR | 7,850 | MNR | MNR | 5,121 | MNR | MNR | 1,485 | MNR | MNR | ||||||||||||||
| Excess income ($000s) | 25,540 | MNR | MNR | 12,593 | MNR | MNR | 16,762 | MNR | MNR | 6,228 | MNR | MNR | ||||||||||||||
| Excess margin (%) | 5.3 | 2.8 | 3.0 | 3.6 | 2.0 | 1.6 | 3.9 | 2.2 | 0.3 | 3.1 | 2.6 | 1.5 | ||||||||||||||
| Operating EBIDA margin (%) | 9.8 | 7.8 | 7.9 | 8.1 | 7.3 | 6.8 | 6.9 | 7.4 | 5.3 | 6.7 | 6.8 | 7.0 | ||||||||||||||
| EBIDA margin (%) | 10.9 | 9.5 | 8.4 | 9.3 | 8.2 | 8.6 | 10.0 | 8.3 | 6.6 | 8.8 | 8.4 | 7.9 | ||||||||||||||
| Net available for debt service ($000s) | 54,341 | 38,736 | 39,461 | 44,333 | 26,735 | 22,518 | 46,129 | 46,533 | 32,020 | 17,867 | 14,812 | 14,193 | ||||||||||||||
| Maximum annual debt service ($000s) | 12,922 | MNR | MNR | 11,552 | MNR | MNR | 13,907 | MNR | MNR | 7,340 | MNR | MNR | ||||||||||||||
| Maximum annual debt service coverage (x) | 4.2 | 2.7 | 3.0 | 3.4 | 2.8 | 2.5 | 3.9 | 2.6 | 2.2 | 2.4 | 2.3 | 2.6 | ||||||||||||||
| Operating lease-adjusted coverage (x)* | 4.0 | 2.5 | 2.5 | 2.9 | 2.1 | 2.3 | 3.3 | 2.2 | 2.0 | 2.1 | 2.0 | 2.2 | ||||||||||||||
| Liquidity and financial flexibility | ||||||||||||||||||||||||||
| Unrestricted reserves ($000s) | 227,189 | 186,959 | 206,507 | 171,165 | 175,408 | 161,324 | 175,469 | 185,443 | 172,625 | 56,252 | 43,214 | 38,943 | ||||||||||||||
| Unrestricted days' cash on hand | 207.2 | 194.5 | 173.4 | 172.9 | 201.4 | 168.0 | 160.7 | 158.6 | 132.4 | 112.2 | 111.0 | 89.4 | ||||||||||||||
| Unrestricted reserves/total long-term debt (%) | 148.1 | 140.7 | 141.6 | 187.1 | 189.4 | 172.5 | 111.9 | 110.5 | 88.7 | 78.5 | 93.4 | 76.9 | ||||||||||||||
| Unrestricted reserves/contingent liabilities (%)* | 779.6 | 389.8 | 335.3 | 575.6 | 411.4 | 688.9 | 2,100.2 | 522.7 | 408.0 | 333.9 | 284.0 | 405.2 | ||||||||||||||
| Average age of plant (years) | 13.8 | 13.4 | 12.7 | 12.8 | 13.3 | 12.9 | 15.3 | 14.7 | 14.3 | 14.1 | 13.8 | 13.6 | ||||||||||||||
| Capital expenditures/depreciation and amortization (%) | 112.8 | 124.4 | 100.8 | 83.5 | 67.2 | 104.5 | 81.1 | 75.4 | 102.0 | 79.1 | 74.0 | 66.2 | ||||||||||||||
| Debt and liabilities | ||||||||||||||||||||||||||
| Total long-term debt ($000s) | 162,752 | MNR | MNR | 144,730 | MNR | MNR | 135,091 | MNR | MNR | 81,344 | MNR | MNR | ||||||||||||||
| Long-term debt/capitalization (%) | 33.2 | 30.9 | 29.2 | 30.4 | 29.1 | 30.1 | 42.6 | 42.8 | 43.9 | 47.0 | 48.0 | 50.8 | ||||||||||||||
| Contingent liabilities ($000s)* | 50,000 | MNR | MNR | 24,985 | MNR | MNR | 10,460 | MNR | MNR | 10,000 | MNR | MNR | ||||||||||||||
| Contingent liabilities/total long-term debt (%)* | 25.7 | 42.4 | 37.4 | 15.6 | 22.9 | 21.9 | 6.7 | 21.0 | 26.4 | 13.6 | 16.2 | 9.8 | ||||||||||||||
| Debt burden (%) | 2.7 | 2.7 | 3.0 | 2.8 | 2.9 | 3.3 | 2.8 | 2.9 | 2.9 | 2.9 | 3.5 | 3.5 | ||||||||||||||
| Defined-benefit plan funded status (%)* | 89.2 | 77.5 | 79.9 | 94.7 | 81.9 | 79.4 | 91.6 | 82.5 | 82.3 | 80.3 | 69.6 | 68.3 | ||||||||||||||
| Miscellaneous | ||||||||||||||||||||||||||
| Salaries & benefits/NPR (%) | 55.6 | 59.4 | 56.4 | 57.4 | 57.6 | 57.8 | 58.6 | 60.3 | 57.7 | 56.8 | 60.1 | 55.5 | ||||||||||||||
| Nonoperating revenue/total revenue (%) | 2.5 | 1.4 | 1.5 | 1.5 | 1.5 | 1.0 | 1.4 | 1.0 | 1.1 | 0.8 | 1.0 | 0.8 | ||||||||||||||
| Cushion ratio (x) | 21.4 | 17.5 | 16.7 | 16.0 | 16.7 | 14.4 | 14.7 | 12.7 | 9.5 | 7.8 | 9.7 | 7.0 | ||||||||||||||
| Days in accounts receivable | 49.3 | 46.8 | 50.4 | 44.5 | 43.6 | 45.0 | 42.6 | 44.2 | 48.0 | 44.6 | 45.0 | 49.1 | ||||||||||||||
| Cash flow/total liabilities (%) | 18.0 | 11.5 | 10.3 | 13.8 | 8.9 | 10.6 | 12.5 | 9.0 | 8.7 | 9.6 | 8.0 | 8.6 | ||||||||||||||
| Pension-adjusted long-term debt/capitalization (%)* | 33.2 | 31.9 | 33.0 | 33.0 | 35.0 | 34.7 | 45.1 | 44.4 | 45.6 | 47.1 | 52.0 | 53.4 | ||||||||||||||
| Adjusted operating margin (%)** | 0.4 | MNR | MNR | 0.0 | MNR | MNR | (1.6) | MNR | MNR | (0.9) | MNR | MNR | ||||||||||||||
| MNR--median not reported. *These ratios are only for organizations that have defined-benefit pension plans, operating leases, or contingent liabilities. **Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to COVID-19 stimulus funds recognized, but could comprise other nonrecurring items. | ||||||||||||||||||||||||||
Ratio Analysis
We view ratio analysis as an important tool in our assessment of the credit quality of not-for-profit health care organizations in addition to other key considerations including our analysis of enterprise profile factors and forward-looking views relative to both the business and financial positions. The median ratios offer a snapshot of the financial profile and help in the comparison of credits across rating categories. Tracking median ratios over time also presents a clearer understanding of industrywide trends and provides a tool to better assess the sector's future credit quality.
The financial statements used for medians and in our analysis include both obligated and nonobligated group members. For the 2020 and 2021 medians, unrestricted reserves exclude Medicare advance payments. All recognized CARES Act funding and other pandemic related relief is included in total operating revenue.
Related Research
- U.S. Not-For-Profit Acute Health Care 2021 Medians: Peak Performance Highlights Cushion As Sector Encounters A Challenging Period, Aug. 24, 2022
- U.S. Not-For-Profit Health Care Stand-Alone Hospital Median Financial Ratios--2021, Aug. 24, 2022
- U.S. Not-For-Profit Health Care System Median Financial Ratios--2021, Aug. 24, 2022
- U.S. Not-For-Profit Health Care Children’s Hospital Median Financial Ratios--2021, Aug. 24, 2022
- U.S. Not-For-Profit Acute Health Care Speculative Grade Median Financial Ratios--2021, Aug. 24, 2022
- U.S. Not-For-Profit Health Care Ratings And Outlooks As of June 30, 2021, July 21, 2022
- Outlook For U.S. Not-For-Profit Acute Health Care: Navigating The Bumps While Getting Back On Track, Jan. 12, 2021
- U.S. Not-For-Profit Acute Health Care Midyear 2022 Update: Providers Face Mounting Pressures From Inflation And Labor Costs, June 27, 2022
- Outlook For U.S. Not-For-Profit Acute Health Care: A Booster May Be Needed, Jan. 6, 2022
Glossary of our ratios
- Glossary: Not-For-Profit Health Care Organization Ratios, March 19, 2018
Quarterly rating actions
- U.S. Not-For-Profit Health Care Rating Actions, June 2022 And Second-Quarter 2022, July 25, 2022
- U.S. Not-For-Profit Health Care Rating Actions, March And First-Quarter 2022, April 27, 2022
This report does not constitute a rating action.
| Primary Credit Analysts: | Chloe A Pickett, Centennial + 1 (303) 721 4122; Chloe.Pickett@spglobal.com |
| Anne E Cosgrove, New York + 1 (212) 438 8202; anne.cosgrove@spglobal.com | |
| Secondary Contacts: | Suzie R Desai, Chicago + 1 (312) 233 7046; suzie.desai@spglobal.com |
| Stephen Infranco, New York + 1 (212) 438 2025; stephen.infranco@spglobal.com | |
| Research Contributors: | Kunal Salunke, CRISIL Global Analytical Center, an S&P affiliate, Mumbai |
| Akul Patel, CRISIL Global Analytical Center, an S&P affiliate, Mumbai |
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