Rating And Outlook Overview
Number of rated stand-alone hospitals has declined. The number of stand-alone hospitals rated by S&P Global Ratings declined to 243 from 257 year over year, 88% of which are reflected in our 2022 medians. 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. While the number of stand-alone hospitals we rate has seen a slight multiyear decline, the drop was markedly higher this year as compared with the relative stability seen in last year's report, which was partly aided by new issuers accessing the bond market.
Rating distribution continues to demonstrate a widening gap in credit quality. The largest proportion of stand-alone hospital ratings are in the 'A' category, followed by the 'BBB' category, which is historically consistent, though 2023 saw a decline in both categories. 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 figures, reflecting an increasing gap in credit quality, which can occur during periods of operating stress.
Stand-alone hospitals seeing slightly increased 'AA' category distribution. While the median rating for stand-alone hospitals remains lower than the median rating for systems, 'A-' compared with 'A+' respectively, there was a slight increase in the percentage of 'AA' category stand-alone issuers and corresponding slight decrease in the percentage of 'AA' category system issuers in 2023. Highly rated stand-alone hospitals in the 'AA' category, about one-third of which are children's hospitals, displayed good performance in 2022. Furthermore, many of these issuers demonstrate healthy financial metrics despite the decline from fiscal 2021 medians because many have a stronger cushion relative to systems to achieve the same rating, and as such may have greater financial flexibility to absorb some level of operating weakness.
Large increase in negative outlooks compared with the previous year. Negative outlooks now represent nearly a quarter of rated stand-alone hospitals, over 10% higher than 2022 yet just below a peak of 27% in 2020. However, despite the increase in unfavorable outlook revisions, the vast majority of the portfolio remains on a stable outlook. Further, while our sector outlook remains negative, there are still 14 stand-alone hospitals (about 6%) that maintain a positive outlook.
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Key Median Takeaways
The operating volatility and continued rating transitions over the past year, coupled with various uneven revenue items related to provider relief funds, FEMA grants, and state supplemental programs, present some unique limitations in the comparison of medians across health care systems and stand-alone hospitals, as well as between rating categories and the prior year. Clear conclusions or developing trends could be somewhat challenging to identify without the benefit of an additional one to two years of data. For this report, we've provided an additional table of the overall stand-alone median data with lower and upper half medians for select financial metrics to highlight dispersion of the median data and also compared this with 2019, the last year of medians before the COVID-19 pandemic.
Revenue increased across rating categories. Stand-alone hospitals experienced impressive growth in both net patient revenue and total operating revenue medians as compared with the previous year. Each rating category saw double-digit growth, compared with the overall 5% growth observed for health care systems. This healthy revenue growth could be a function of a variety of factors including rating transitions, recovery from COVID-19 pandemic driven decline in fiscal 2020, and increasing state and supplemental funding. In addition, the generally lower revenue base of stand-alone providers could cause the year-to-year variance from the aforementioned factors to be more impactful. However, weakened operating margins despite impressive revenue growth highlights the exceptional labor and inflationary pressure all providers experienced in fiscal 2022.
Operating margins and cash flow deteriorated across most rating levels. Despite generally good revenue growth, stand-alone hospitals experienced declining operating performance and cash flow, as expected and in line with the larger portfolio, as year over year expenses increased at the same rate or more relative to revenue growth. Notably, all ratings in the 'BBB' category had negative operating margins. The combined 'AA+' and 'AA' rated level group was the only median subset to see an improved operating margin compared with fiscal 2021. In contrast, operating margins in fiscal 2022 declined for health care systems at the same rating levels. In conjunction with reduced operating income, investment market volatility resulted in much lower investment income, contributing to meaningfully weakened cash flow and maximum annual debt service coverage across the stand-alone portfolio.
Unrestricted reserves significantly deteriorated from exceptional fiscal 2021. Following several years of growth, weakened cash flow and unrealized investment losses resulted in a significant drop in unrestricted reserves and related metrics. As such, days' cash on hand decreased by about 20% across each rating category, further exacerbated by inflationary pressure on expenses. This decline was consistent with system peers. In addition, capital expenditures increased across nearly all rating levels, with only 'A-' and 'BBB-' rated providers spending less than the prior year. While each rating level experienced declines in unrestricted reserves, 'AA' category ratings continue to generate metrics that we consider extremely strong.
Debt profiles generally stable with higher leverage driven by some increased debt as well as declining unrestricted net assets. Median leverage for stand-alone hospitals rose across rating categories and most rating levels, though notably 'A-' and 'BBB-' rated stand-alone providers experienced stable and improved leverage, respectively. Somewhat offsetting higher leverage, defined-benefit pension plans funded status improved across the stand-alone portfolio, supported by rising discount rates. Further, aside from the 'AA+/AA' rating level, the other rating categories de-risked debt portfolios through reduced contingent liability exposure. As observed with health care systems, debt capacity across rating levels is primarily limited by weaker cash flow and unrestricted reserves.
Waning provider relief funding continued to support operations across lower rated issuers. Though less pronounced at higher rating levels, provider relief funding continued to support operating performance in fiscal 2022. Providers at lower rating levels, particularly speculative grade ratings, benefitted meaningfully from these funds, as evidenced by the median operating margin that is far better than the adjusted operating margin that excludes provider relief funds. As provider relief funding continues to wane, there is some uncertainty around future underlying operating performance in fiscal 2023 absent the additional support.
Table 1
| U.S. not-for-profit stand-alone hospital medians by rating category--2022 versus 2021 versus 2020 | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AA | A | BBB | Speculative grade | |||||||||||||||||||||||
| Fiscal year | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | ||||||||||||||
| Sample size | 39 | 39 | 35 | 89 | 97 | 105 | 59 | 68 | 72 | 27 | 31 | 34 | ||||||||||||||
| Financial performance | ||||||||||||||||||||||||||
| Net patient revenue ($000s) | 1,383,205 | 1,121,775 | 985,255 | 585,304 | 505,430 | 512,008 | 447,332 | 381,763 | 357,024 | 299,128 | 178,450 | 140,387 | ||||||||||||||
| Total operating revenue ($000s) | 1,708,431 | 1,456,287 | 1,315,225 | 602,011 | 532,808 | 538,531 | 489,282 | 431,818 | 388,937 | 329,060 | 217,105 | 169,704 | ||||||||||||||
| Total operating expenses ($000s) | 1,659,360 | 1,362,371 | MNR | 619,798 | 518,839 | MNR | 484,439 | 413,070 | MNR | 352,966 | 238,111 | MNR | ||||||||||||||
| Operating income ($000s) | 50,694 | 53,930 | MNR | 962 | 13,969 | MNR | -6,284 | 9,289 | MNR | -9,354 | 4,475 | MNR | ||||||||||||||
| Operating margin (%) | 4.3 | 5.1 | 3.5 | 0.4 | 3.8 | 1.9 | -1.7 | 2.5 | 0.7 | -1.1 | 1.5 | 1.3 | ||||||||||||||
| Net nonoperating income ($000s) | 37,255 | 55,251 | MNR | 11,630 | 17,876 | MNR | 5,158 | 7,922 | MNR | 2,210 | 1,485 | MNR | ||||||||||||||
| Excess income ($000s) | 104,718 | 159,152 | MNR | 9,955 | 38,852 | MNR | -1,592 | 16,930 | MNR | -3,758 | 6,228 | MNR | ||||||||||||||
| Excess margin (%) | 6.8 | 9.8 | 6.7 | 2.7 | 7.2 | 4.1 | -0.3 | 4.6 | 2.5 | -0.7 | 3.1 | 2.6 | ||||||||||||||
| Operating EBIDA margin (%) | 9.8 | 11.0 | 9.8 | 6.5 | 9.3 | 8.3 | 3.8 | 9.0 | 7.3 | 1.9 | 6.7 | 6.8 | ||||||||||||||
| EBIDA margin (%) | 13.0 | 15.6 | 12.6 | 8.5 | 13.0 | 10.3 | 5.2 | 10.6 | 8.4 | 4.5 | 8.8 | 8.4 | ||||||||||||||
| Net available for debt service ($000s) | 165,289 | 242,493 | 163,169 | 38,761 | 76,440 | 52,457 | 28,677 | 45,988 | 32,873 | 11,465 | 17,867 | 14,812 | ||||||||||||||
| Maximum annual debt service ($000s) | 26,182 | 24,237 | MNR | 12,016 | 13,170 | MNR | 13,384 | 13,249 | MNR | 8,046 | 7,340 | MNR | ||||||||||||||
| Maximum annual debt service coverage (x) | 6.5 | 8.0 | 6.1 | 3.9 | 5.5 | 4.0 | 1.8 | 3.7 | 2.7 | 1.4 | 2.4 | 2.3 | ||||||||||||||
| Operating lease-adjusted coverage (x) | 5.3 | 6.4 | 4.5 | 3.1 | 4.6 | 3.4 | 1.6 | 3.3 | 2.3 | 1.3 | 2.1 | 2.0 | ||||||||||||||
| Liquidity and financial flexibility | ||||||||||||||||||||||||||
| Unrestricted reserves ($000s) | 1,277,939 | 1,299,068 | 1,141,448 | 372,986 | 424,577 | 391,409 | 201,884 | 183,364 | 182,276 | 64,838 | 56,252 | 43,214 | ||||||||||||||
| Unrestricted days' cash on hand | 335.5 | 423.9 | 354.8 | 257.9 | 308.7 | 295.9 | 148.6 | 185.9 | 171.7 | 89.2 | 112.2 | 111.0 | ||||||||||||||
| Unrestricted reserves/total long-term debt (%) | 300.2 | 370.2 | 292.3 | 202.4 | 243.2 | 218.1 | 128.2 | 148.1 | 134.1 | 62.5 | 78.5 | 93.4 | ||||||||||||||
| Unrestricted reserves/contingent liabilities (%)* | 1,478.2 | 1,391.7 | 960.8 | 909.8 | 876.5 | 846.0 | 769.0 | 779.6 | 411.4 | 813.1 | 333.9 | 284.0 | ||||||||||||||
| Average age of plant (years) | 11.2 | 11.0 | 11.1 | 12.5 | 12.1 | 11.9 | 12.9 | 13.8 | 13.7 | 14.3 | 14.1 | 13.8 | ||||||||||||||
| Capital expenditures/depreciation and amortization (%) | 138.2 | 123.0 | 126.1 | 119.0 | 107.9 | 114.9 | 106.8 | 86.6 | 86.4 | 114.7 | 79.1 | 74.0 | ||||||||||||||
| Debt and liabilities | ||||||||||||||||||||||||||
| Total long-term debt ($000s) | 373,278 | 342,465 | MNR | 162,337 | 149,778 | MNR | 188,494 | 144,730 | MNR | 107,721 | 81,344 | MNR | ||||||||||||||
| Long-term debt/capitalization (%) | 19.7 | 18.0 | 21.1 | 25.1 | 23.7 | 25.1 | 36.0 | 35.3 | 35.5 | 51.0 | 47.0 | 48.0 | ||||||||||||||
| Contingent liabilities ($000s)* | 104,900 | 115,873 | MNR | 50,000 | 52,363 | MNR | 31,130 | 35,805 | MNR | 7,900 | 10,000 | MNR | ||||||||||||||
| Contingent liabilities/total long-term debt (%)* | 19.3 | 23.7 | 27.8 | 24.4 | 26.3 | 26.8 | 14.8 | 18.7 | 27.1 | 6.8 | 13.6 | 16.2 | ||||||||||||||
| Debt burden (%) | 1.9 | 1.9 | 2.1 | 2.4 | 2.4 | 2.7 | 2.7 | 2.8 | 2.9 | 3.0 | 2.9 | 3.5 | ||||||||||||||
| Defined-benefit plan funded status (%)* | 98.6 | 97.5 | 92.5 | 91.8 | 89.3 | 77.1 | 96.9 | 91.6 | 81.9 | 83.6 | 80.3 | 69.6 | ||||||||||||||
| Miscellaneous | ||||||||||||||||||||||||||
| Salaries & benefits/NPR (%) | 59.0 | 58.9 | 61.3 | 58.0 | 55.8 | 58.1 | 57.1 | 57.4 | 59.4 | 55.9 | 56.8 | 60.1 | ||||||||||||||
| Nonoperating revenue/total revenue (%) | 2.4 | 4.7 | 2.6 | 2.1 | 3.5 | 2.2 | 1.2 | 1.7 | 1.2 | 0.6 | 0.8 | 1.0 | ||||||||||||||
| Cushion ratio (x) | 44.9 | 48.7 | 41.5 | 27.6 | 32.0 | 28.1 | 15.8 | 16.7 | 15.8 | 7.3 | 7.8 | 9.7 | ||||||||||||||
| Days in accounts receivable | 52.6 | 54.8 | 49.7 | 47.7 | 48.9 | 44.8 | 46.8 | 44.5 | 44.7 | 45.4 | 44.6 | 45.0 | ||||||||||||||
| Cash flow/total liabilities (%) | 21.0 | 24.8 | 17.9 | 14.2 | 18.3 | 13.9 | 7.1 | 14.1 | 9.2 | 4.6 | 9.6 | 8.0 | ||||||||||||||
| Pension-adjusted long-term debt/capitalization (%)* | 18.9 | 17.5 | 21.7 | 25.8 | 24.9 | 27.3 | 37.2 | 35.3 | 37.1 | 51.0 | 47.1 | 52.0 | ||||||||||||||
| Adjusted operating margin (%)§ | 2.7 | 3.0 | MNR | -0.4 | 0.8 | MNR | -2.6 | 0.1 | MNR | -5.5 | -0.9 | MNR | ||||||||||||||
| MNR--median not reported. *These ratios are only for organizations that have defined-benefit (DB) pension plans or contingent liabilities. §Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to pandemic related relief funds recognized, but could comprise other nonrecurring items. | ||||||||||||||||||||||||||
Table 2A
| U.S. not-for-profit stand-alone hospital medians by rating level--2022 versus 2021 versus 2020 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AA+/AA† | AA- | |||||||||||||
| Fiscal year | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | ||||||||
| Sample size | 13 | 11 | 11 | 26 | 28 | 24 | ||||||||
| Financial performance | ||||||||||||||
| Net patient revenue ($000s) | 1,747,044 | 1,348,121 | 1,212,109 | 1,045,723 | 943,415 | 881,434 | ||||||||
| Total operating revenue ($000s) | 2,387,171 | 2,194,482 | 1,965,180 | 1,120,920 | 994,416 | 984,770 | ||||||||
| Total operating expenses ($000s) | 2,064,331 | 1,815,681 | MNR | 1,056,828 | 996,608 | MNR | ||||||||
| Operating income ($000s) | 172,434 | 191,289 | MNR | 43,814 | 48,200 | MNR | ||||||||
| Operating margin (%) | 7.8 | 7.1 | 6.1 | 3.1 | 3.6 | 3.0 | ||||||||
| Net nonoperating income ($000s) | 24,137 | 103,273 | MNR | 39,540 | 47,279 | MNR | ||||||||
| Excess income ($000s) | 236,017 | 292,745 | MNR | 85,293 | 107,381 | MNR | ||||||||
| Excess margin (%) | 8.2 | 11.6 | 9.0 | 6.8 | 9.3 | 6.2 | ||||||||
| Operating EBIDA margin (%) | 12.1 | 14.8 | 12.4 | 9.0 | 9.7 | 8.7 | ||||||||
| EBIDA margin (%) | 13.0 | 19.3 | 14.9 | 12.9 | 14.0 | 12.6 | ||||||||
| Net available for debt service ($000s) | 360,002 | 411,003 | 238,224 | 151,655 | 175,225 | 134,766 | ||||||||
| Maximum annual debt service ($000s) | 52,086 | 57,134 | MNR | 21,669 | 21,054 | MNR | ||||||||
| Maximum annual debt service coverage (x) | 5.4 | 8.8 | 5.3 | 6.6 | 7.8 | 6.1 | ||||||||
| Operating lease-adjusted coverage (x) | 5.3 | 7.0 | 4.4 | 5.3 | 6.2 | 4.5 | ||||||||
| Liquidity and financial flexibility | ||||||||||||||
| Unrestricted reserves ($000s) | 1,769,902 | 1,730,552 | 1,303,236 | 1,031,303 | 1,073,707 | 906,282 | ||||||||
| Unrestricted days' cash on hand | 425.8 | 568.0 | 452.5 | 320.8 | 403.9 | 347.7 | ||||||||
| Unrestricted reserves/total long-term debt (%) | 337.8 | 408.7 | 322.6 | 299.7 | 347.6 | 279.5 | ||||||||
| Unrestricted reserves/contingent liabilities (%)* | 1,203.8 | 2,328.2 | 1,763.9 | 1,478.8 | 1,316.1 | 848.3 | ||||||||
| Average age of plant (years) | 11.0 | 10.5 | 11.1 | 11.3 | 12.1 | 11.3 | ||||||||
| Capital expenditures/depreciation and amortization (%) | 192.3 | 159.0 | 180.9 | 119.2 | 101.5 | 114.2 | ||||||||
| Debt and liabilities | ||||||||||||||
| Total long-term debt ($000s) | 798,046 | 589,909 | MNR | 296,713 | 280,159 | MNR | ||||||||
| Long-term debt/capitalization (%) | 19.6 | 17.2 | 18.3 | 20.6 | 18.1 | 21.6 | ||||||||
| Contingent liabilities ($000s)* | 164,363 | 155,870 | MNR | 79,975 | 112,097 | MNR | ||||||||
| Contingent liabilities/total long-term debt (%)* | 21.1 | 15.5 | 22.6 | 19.3 | 26.8 | 40.6 | ||||||||
| Debt burden (%) | 2.1 | 2.2 | 2.5 | 1.8 | 1.8 | 2.0 | ||||||||
| Defined-benefit plan funded status (%)* | 104.9 | 97.4 | 86.5 | 98.2 | 97.5 | 94.3 | ||||||||
| Miscellaneous | ||||||||||||||
| Salaries & benefits/NPR (%) | 61.1 | 59.4 | 67.5 | 58.2 | 58.7 | 58.0 | ||||||||
| Nonoperating revenue/total revenue (%) | 1.7 | 6.4 | 2.1 | 3.3 | 4.2 | 2.8 | ||||||||
| Cushion ratio (x) | 49.9 | 57.9 | 43.6 | 43.4 | 47.1 | 41.4 | ||||||||
| Days in accounts receivable | 55.2 | 56.6 | 52.6 | 48.4 | 47.8 | 47.9 | ||||||||
| Cash flow/total liabilities (%) | 20.8 | 30.3 | 21.1 | 21.1 | 24.2 | 16.8 | ||||||||
| Pension-adjusted long-term debt/capitalization (%)* | 18.6 | 17.4 | 21.6 | 19.2 | 18.1 | 21.9 | ||||||||
| Adjusted operating margin (%)§ | 7.6 | 5.3 | MNR | 2.5 | 2.2 | MNR | ||||||||
| MNR--median not reported. *These ratios are only for organizations that have defined-benefit (DB) pension plans or contingent liabilities. §Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to pandemic-related relief funds recognized, but could comprise other nonrecurring items. †Includes 12 'AA' and one 'AA+' rated hospitals in 2022, 10 'AA' and one 'AA+' rated hospitals in 2021 and 2020. | ||||||||||||||
Table 2B
| U.S. not-for-profit stand-alone hospital medians by rating level--2022 versus 2021 versus 2020 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| A+ | A | A- | ||||||||||||||||||
| Fiscal year | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | |||||||||||
| Sample size | 22 | 27 | 29 | 34 | 36 | 41 | 33 | 34 | 35 | |||||||||||
| Financial performance | ||||||||||||||||||||
| Net patient revenue ($000s) | 690,129 | 692,331 | 666,751 | 645,171 | 602,423 | 535,924 | 333,417 | 329,938 | 310,960 | |||||||||||
| Total operating revenue ($000s) | 735,651 | 743,144 | 698,144 | 697,451 | 640,276 | 570,917 | 345,502 | 353,083 | 336,696 | |||||||||||
| Total operating expenses ($000s) | 746,478 | 748,997 | MNR | 716,214 | 629,929 | MNR | 347,215 | 345,973 | MNR | |||||||||||
| Operating income ($000s) | 3,229 | 26,989 | MNR | 2,154 | 21,041 | MNR | 821 | 7,128 | MNR | |||||||||||
| Operating margin (%) | 0.6 | 4.7 | 2.1 | 0.2 | 3.3 | 0.6 | 0.4 | 2.8 | 1.6 | |||||||||||
| Net nonoperating income ($000s) | 21,777 | 43,380 | MNR | 15,266 | 12,047 | MNR | 6,351 | 11,182 | MNR | |||||||||||
| Excess income ($000s) | 21,044 | 86,717 | MNR | 9,302 | 37,894 | MNR | 9,073 | 19,669 | MNR | |||||||||||
| Excess margin (%) | 3.1 | 8.7 | 4.8 | 1.9 | 6.3 | 4.0 | 4.2 | 6.7 | 4.1 | |||||||||||
| Operating EBIDA margin (%) | 6.6 | 11.2 | 9.6 | 4.9 | 9.3 | 8.2 | 7.0 | 8.7 | 7.7 | |||||||||||
| EBIDA margin (%) | 8.9 | 14.6 | 11.3 | 7.2 | 11.9 | 10.1 | 8.9 | 12.7 | 10.1 | |||||||||||
| Net available for debt service ($000s) | 62,241 | 126,722 | 82,349 | 38,167 | 74,108 | 52,933 | 28,345 | 50,992 | 33,879 | |||||||||||
| Maximum annual debt service ($000s) | 21,325 | 20,800 | MNR | 12,855 | 11,602 | MNR | 9,194 | 9,904 | MNR | |||||||||||
| Maximum annual debt service coverage (x) | 4.2 | 6.7 | 4.7 | 3.5 | 5.4 | 3.7 | 4.3 | 5.0 | 3.5 | |||||||||||
| Operating lease-adjusted coverage (x) | 2.9 | 5.5 | 4.0 | 3.0 | 4.6 | 3.1 | 3.4 | 4.1 | 3.2 | |||||||||||
| Liquidity and financial flexibility | ||||||||||||||||||||
| Unrestricted reserves ($000s) | 663,419 | 814,989 | 693,315 | 346,230 | 366,387 | 391,409 | 243,833 | 309,649 | 245,734 | |||||||||||
| Unrestricted days' cash on hand | 361.6 | 387.3 | 337.1 | 231.9 | 261.3 | 272.5 | 234.4 | 301.6 | 267.9 | |||||||||||
| Unrestricted reserves/total long-term debt (%) | 286.2 | 302.9 | 263.2 | 194.5 | 224.3 | 205.6 | 188.2 | 210.7 | 207.3 | |||||||||||
| Unrestricted reserves/contingent liabilities (%)* | 859.3 | 1,250.8 | 1,083.1 | 696.2 | 812.6 | 782.6 | 1,060.2 | 646.5 | 997.6 | |||||||||||
| Average age of plant (years) | 12.8 | 11.5 | 10.7 | 12.0 | 12.3 | 11.7 | 13.2 | 12.7 | 12.4 | |||||||||||
| Capital expenditures/depreciation and amortization (%) | 130.7 | 96.3 | 110.0 | 131.7 | 114.7 | 101.9 | 103.7 | 110.8 | 126.0 | |||||||||||
| Debt and liabilities | ||||||||||||||||||||
| Total long-term debt ($000s) | 230,619 | 224,762 | MNR | 191,721 | 146,634 | MNR | 106,595 | 118,782 | MNR | |||||||||||
| Long-term debt/capitalization (%) | 21.4 | 20.6 | 23.8 | 27.1 | 25.0 | 25.7 | 25.3 | 25.3 | 27.1 | |||||||||||
| Contingent liabilities ($000s)* | 100,000 | 60,299 | MNR | 59,845 | 52,608 | MNR | 32,975 | 50,280 | MNR | |||||||||||
| Contingent liabilities/total long-term debt (%)* | 27.9 | 19.4 | 25.3 | 24.4 | 26.3 | 29.7 | 23.9 | 38.3 | 23.4 | |||||||||||
| Debt burden (%) | 2.4 | 2.4 | 2.4 | 2.4 | 2.3 | 2.6 | 2.4 | 2.6 | 2.9 | |||||||||||
| Defined-benefit plan funded status (%)* | 89.4 | 95.8 | 72.1 | 98.1 | 88.6 | 80.7 | 91.3 | 89.3 | 76.9 | |||||||||||
| Miscellaneous | ||||||||||||||||||||
| Salaries and benefits/NPR (%) | 58.6 | 55.5 | 57.4 | 55.8 | 54.5 | 58.9 | 58.0 | 56.7 | 58.0 | |||||||||||
| Nonoperating revenue/total revenue (%) | 3.0 | 5.8 | 2.4 | 2.2 | 2.6 | 2.4 | 1.9 | 2.9 | 2.2 | |||||||||||
| Cushion ratio (x) | 34.6 | 40.0 | 38.7 | 27.6 | 30.5 | 27.5 | 24.1 | 25.5 | 23.3 | |||||||||||
| Days in accounts receivable | 48.0 | 52.0 | 46.6 | 48.3 | 48.0 | 44.5 | 45.6 | 48.2 | 44.4 | |||||||||||
| Cash flow/total liabilities (%) | 14.8 | 23.1 | 15.9 | 11.6 | 16.2 | 12.3 | 15.9 | 18.0 | 13.9 | |||||||||||
| Pension-adjusted long-term debt/capitalization (%)* | 21.6 | 21.0 | 25.1 | 27.4 | 26.9 | 28.2 | 27.0 | 25.7 | 27.8 | |||||||||||
| Adjusted operating margin (%)§ | 0.0 | 3.2 | MNR | -0.5 | 1.3 | MNR | -1.6 | 0.6 | MNR | |||||||||||
| MNR--median not reported. *These ratios are only for organizations that have defined-benefit (DB) pension plans or contingent liabilities. §Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to pandemic related relief funds recognized, but could comprise other nonrecurring items. | ||||||||||||||||||||
Table 2C
| U.S. not-for-profit stand-alone hospital medians by rating level--2022 versus 2021 versus 2020 | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BBB+ | BBB | BBB- | Speculative grade | |||||||||||||||||||||||
| Fiscal year | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | ||||||||||||||
| Sample size | 26 | 25 | 25 | 19 | 24 | 25 | 14 | 19 | 22 | 27 | 31 | 34 | ||||||||||||||
| Financial performance | ||||||||||||||||||||||||||
| Net patient revenue ($000s) | 444,511 | 343,171 | 386,130 | 447,332 | 356,571 | 246,562 | 466,422 | 417,020 | 410,931 | 299,128 | 178,450 | 140,387 | ||||||||||||||
| Total operating revenue ($000s) | 487,604 | 387,875 | 423,312 | 496,411 | 381,585 | 315,900 | 492,732 | 445,803 | 453,536 | 329,060 | 217,105 | 169,704 | ||||||||||||||
| Total operating expenses ($000s) | 482,377 | 375,626 | MNR | 505,022 | 376,308 | MNR | 498,587 | 454,729 | MNR | 352,966 | 238,111 | MNR | ||||||||||||||
| Operating income ($000s) | -9,851 | 13,254 | MNR | -4,470 | 7,145 | MNR | -4,810 | 6,554 | MNR | -9,354 | 4,475 | MNR | ||||||||||||||
| Operating margin (%) | -2.2 | 3.4 | 0.7 | -1.1 | 2.2 | 0.0 | -1.8 | 2.0 | 0.8 | -1.1 | 1.5 | 1.3 | ||||||||||||||
| Net nonoperating income ($000s) | 7,509 | 8,942 | MNR | 6,425 | 7,850 | MNR | 2,910 | 5,121 | MNR | 2,210 | 1,485 | MNR | ||||||||||||||
| Excess income ($000s) | 354 | 25,540 | MNR | -1,592 | 12,593 | MNR | -5,048 | 16,762 | MNR | -3,758 | 6,228 | MNR | ||||||||||||||
| Excess margin (%) | 0.2 | 5.3 | 2.8 | -0.3 | 3.6 | 2.0 | -1.5 | 3.9 | 2.2 | -0.7 | 3.1 | 2.6 | ||||||||||||||
| Operating EBIDA margin (%) | 3.2 | 9.8 | 7.8 | 4.4 | 8.1 | 7.3 | 4.2 | 6.9 | 7.4 | 1.9 | 6.7 | 6.8 | ||||||||||||||
| EBIDA margin (%) | 5.9 | 10.9 | 9.5 | 4.9 | 9.3 | 8.2 | 3.9 | 10.0 | 8.3 | 4.5 | 8.8 | 8.4 | ||||||||||||||
| Net available for debt service ($000s) | 29,487 | 54,341 | 38,736 | 32,608 | 44,333 | 26,735 | 20,645 | 46,129 | 46,533 | 11,465 | 17,867 | 14,812 | ||||||||||||||
| Maximum annual debt service ($000s) | 14,701 | 12,922 | MNR | 13,038 | 11,552 | MNR | 14,854 | 13,907 | MNR | 8,046 | 7,340 | MNR | ||||||||||||||
| Maximum annual debt service coverage (x) | 2.0 | 4.2 | 2.7 | 1.7 | 3.4 | 2.8 | 1.6 | 3.9 | 2.6 | 1.4 | 2.4 | 2.3 | ||||||||||||||
| Operating lease-adjusted coverage (x) | 1.7 | 4.0 | 2.5 | 1.5 | 2.9 | 2.1 | 1.3 | 3.3 | 2.2 | 1.3 | 2.1 | 2.0 | ||||||||||||||
| Liquidity and financial flexibility | ||||||||||||||||||||||||||
| Unrestricted reserves ($000s) | 223,353 | 227,189 | 186,959 | 222,661 | 171,165 | 175,408 | 143,633 | 175,469 | 185,443 | 64,838 | 56,252 | 43,214 | ||||||||||||||
| Unrestricted days' cash on hand | 158.3 | 207.2 | 194.5 | 145.7 | 172.9 | 201.4 | 135.6 | 160.7 | 158.6 | 89.2 | 112.2 | 111.0 | ||||||||||||||
| Unrestricted reserves/total long-term debt (%) | 129.2 | 148.1 | 140.7 | 157.4 | 187.1 | 189.4 | 100.4 | 111.9 | 110.5 | 62.5 | 78.5 | 93.4 | ||||||||||||||
| Unrestricted reserves/contingent liabilities (%)* | 769.0 | 779.6 | 389.8 | 1,198.0 | 575.6 | 411.4 | 594.5 | 2,100.2 | 522.7 | 813.1 | 333.9 | 284.0 | ||||||||||||||
| Average age of plant (years) | 13.0 | 13.8 | 13.4 | 12.8 | 12.8 | 13.3 | 13.9 | 15.3 | 14.7 | 14.3 | 14.1 | 13.8 | ||||||||||||||
| Capital expenditures/depreciation and amortization (%) | 128.2 | 112.8 | 124.4 | 108.1 | 83.5 | 67.2 | 73.3 | 81.1 | 75.4 | 114.7 | 79.1 | 74.0 | ||||||||||||||
| Debt and liabilities | ||||||||||||||||||||||||||
| Total long-term debt ($000s) | 197,599 | 162,752 | MNR | 160,569 | 144,730 | MNR | 197,735 | 135,091 | MNR | 107,721 | 81,344 | MNR | ||||||||||||||
| Long-term debt/capitalization (%) | 34.2 | 33.2 | 30.9 | 35.7 | 30.4 | 29.1 | 41.0 | 42.6 | 42.8 | 51.0 | 47.0 | 48.0 | ||||||||||||||
| Contingent liabilities ($000s)* | 35,248 | 50,000 | MNR | 18,648 | 24,985 | MNR | 37,955 | 10,460 | MNR | 7,900 | 10,000 | MNR | ||||||||||||||
| Contingent liabilities/total long-term debt (%)* | 18.8 | 25.7 | 42.4 | 12.0 | 15.6 | 22.9 | 17.5 | 6.7 | 21.0 | 6.8 | 13.6 | 16.2 | ||||||||||||||
| Debt burden (%) | 2.7 | 2.7 | 2.7 | 2.5 | 2.8 | 2.9 | 2.7 | 2.8 | 2.9 | 3.0 | 2.9 | 3.5 | ||||||||||||||
| Defined-benefit plan funded status (%)* | 99.3 | 89.2 | 77.5 | 90.0 | 94.7 | 81.9 | 96.4 | 91.6 | 82.5 | 83.6 | 80.3 | 69.6 | ||||||||||||||
| Miscellaneous | ||||||||||||||||||||||||||
| Salaries & benefits/NPR (%) | 57.6 | 55.6 | 59.4 | 56.2 | 57.4 | 57.6 | 58.3 | 58.6 | 60.3 | 55.9 | 56.8 | 60.1 | ||||||||||||||
| Nonoperating revenue/total revenue (%) | 1.4 | 2.5 | 1.4 | 0.9 | 1.5 | 1.5 | 0.9 | 1.4 | 1.0 | 0.6 | 0.8 | 1.0 | ||||||||||||||
| Cushion ratio (x) | 16.7 | 21.4 | 17.5 | 15.8 | 16.0 | 16.7 | 12.6 | 14.7 | 12.7 | 7.3 | 7.8 | 9.7 | ||||||||||||||
| Days in accounts receivable | 48.4 | 49.3 | 46.8 | 49.8 | 44.5 | 43.6 | 44.6 | 42.6 | 44.2 | 45.4 | 44.6 | 45.0 | ||||||||||||||
| Cash flow/total liabilities (%) | 8.4 | 18.0 | 11.5 | 5.2 | 13.8 | 8.9 | 6.8 | 12.5 | 9.0 | 4.6 | 9.6 | 8.0 | ||||||||||||||
| Pension-adjusted long-term debt/capitalization (%)* | 33.9 | 33.2 | 31.9 | 37.2 | 33.0 | 35.0 | 41.0 | 45.1 | 44.4 | 51.0 | 47.1 | 52.0 | ||||||||||||||
| Adjusted operating margin (%)§ | -3.9 | 0.4 | MNR | -1.7 | 0.0 | MNR | -3.3 | -1.6 | MNR | -5.5 | -0.9 | MNR | ||||||||||||||
| MNR--median not reported. *These ratios are only for organizations that have defined-benefit (DB) pension plans or contingent liabilities. §Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to pandemic related relief funds recognized, but could comprise other nonrecurring items. | ||||||||||||||||||||||||||
Table 3
| U.S. not-for-profit stand-alone hospital median analysis--2022 versus 2019 | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2019 | |||||
| Medians - lower half | Medians - overall | Medians - upper half | Medians - lower half | Medians - overall | Medians - upper half | |
| Select financial metrics | ||||||
| Operating margin (%) | -3.5 | 0.4 | 4.0 | -0.3 | 2.1 | 4.4 |
| EBIDA margin (%) | 4.0 | 7.7 | 12.7 | 7.6 | 10.2 | 13.7 |
| Maximum annual debt service coverage (x) | 1.5 | 3.4 | 5.6 | 2.5 | 3.7 | 5.8 |
| Unrestricted days' cash on hand | 137.4 | 215.3 | 334.0 | 141.9 | 205.7 | 304.4 |
| Unrestricted reserves/total long-term debt (%) | 110.2 | 175.5 | 290.5 | 104.8 | 185.0 | 282.4 |
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 issuers 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, 2021, and 2022 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 2022 Medians: Historically Low Metrics Signify A Long Road To A New Normal, Aug. 7, 2023
- U.S. Not-For-Profit Health Care System Median Financial Ratios--2022, Aug. 7, 2023
- U.S. Not-For-Profit Health Care Children’s Hospital Median Financial Ratios--2022, Aug. 7, 2023
- U.S. Not-For-Profit Acute Health Care Speculative-Grade Median Financial Ratios--2022, Aug. 7, 2023
- U.S. Not-For-Profit Health Care Small Stand-Alone Hospital Median Financial Ratios--2022, Aug. 7, 2023
- U.S. Not-For-Profit Health Care Ratings And Outlooks As of June 30, 2023, July 24, 2023
- U.S. Not-For-Profit Health Care Midyear Update 2023: Out Of Intensive Care And On The Path To Recovery Amid Ongoing Operating Challenges, June 28, 2023
- U.S. Not-For-Profit Acute Health Care Rating Actions, 2022 Year-End Review, Feb. 28, 2023
- Outlook For U.S. Not-For-Profit Acute Health Care: A Long Road Ahead, Dec. 1, 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, March And First-Quarter 2023, April 25, 2023
This report does not constitute a rating action.
| Primary Credit Analysts: | Chloe A Pickett, Englewood + 1 (303) 721 4122; Chloe.Pickett@spglobal.com |
| Patrick Zagar, Dallas + 1 (214) 765 5883; patrick.zagar@spglobal.com | |
| Secondary Contacts: | Stephen Infranco, New York + 1 (212) 438 2025; stephen.infranco@spglobal.com |
| Suzie R Desai, Chicago + 1 (312) 233 7046; suzie.desai@spglobal.com | |
| Research Contributors: | Shrutika Joshi, Pune; shrutika.joshi@spglobal.com |
| Akul Patel, Pune; akul.patel@spglobal.com | |
| Kunal Salunke, Mumbai; kunal.salunke@spglobal.com |
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