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U.S. Not-For-Profit Health Care Stand-Alone Hospital Median Financial Ratios--2023

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U.S. Not-For-Profit Health Care Stand-Alone Hospital Median Financial Ratios--2023

Rating And Outlook Overview

We rate fewer rated stand-alone hospitals due to mergers and migration to systems.   The number of stand-alone hospitals rated by S&P Global Ratings dropped to 228 from 243 year over year, 94% of which are reflected in the 2023 medians. This continues the diminishing trend of rated stand-alone hospitals (15 in the past year) mostly due to mergers and acquisitions as well as a few stand-alone hospitals migrating to systems, which overall increased by 11 this year.

There are fewer hospitals rated in the 'AA' category and more in the 'A' and 'BBB' categories.   The overall rating distribution of stand-alone hospitals remains relatively stable with some minor variations. In addition to a couple of stand-alone hospitals in the 'AA' category migrating to systems, there was also some movement down the rating scale as a couple of stand-alone providers have migrated out of the 'AA' category, and the percent of 'A' ratings has risen. The 'BBB' and speculative-grade categories are relatively stable.

Stand-alone hospitals remain concentrated in the 'A' and 'BBB' categories.   About 70% of stand-alone hospital ratings are concentrated in the 'A' and 'BBB' rating categories, with an even split between 'AA' and speculative-grade for the remaining ratings. The distribution trends lower compared with system ratings, given stand-alone hospitals are more prone to disruption with narrower primary service areas and more limited revenue bases and therefore, generally need to have stronger ratios relative to systems to achieve the same rating. Although the bar is higher, this also provides stand-alone hospitals with greater financial flexibility to absorb some financial stresses.

Slightly favorable shift in outlook distribution between 2023 and mid-2024.   Given the larger sample size of stand-alone hospitals than for systems, small changes to the outlook distribution will be less pronounced in the percentages than they are for systems. The percent of stable outlooks increased from June 2023 to June of this year, although the percentages remain below historical levels. The percentage of negative outlooks remains slightly higher, accounting for almost one-quarter of rated providers, although slightly improved this year. Despite almost one-third of our outlooks being positive or negative, most ratings on stand-alone hospitals have a stable outlook.

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Key Median Takeaways

Given the uneven performance recovery and impacts to various ratios including those on the balance sheet, we've continued to provide an additional view of the overall stand-alone hospital median data with lower and upper half medians for select financial metrics to highlight dispersion of the median data and also compared that data with data for 2022 and 2019, the last year of medians before the COVID-19 pandemic.

Operating margins see mixed results across rating categories, with debt service coverage still below 2021.   Compared with 2022 medians, median operating performance shows mixed results across the rating categories with some improvement in the 'A' and 'BBB' categories, though not back to historical medians, and lower margins in general in the 'AA' and speculative-grade categories. There has also been a trend of underlying operational improvement in 2023, excluding one-time funding (e.g., stimulus related funding, Federal Emergency Management Agency [FEMA]) for all categories except for 'AA'. However, given generally healthy, although reduced 'AA' operating margins, we believe these hospitals still maintain some cushion to offset operating pressure, especially considering their solid balance-sheet metrics compared with those of lower-rated stand-alone hospitals. For the 'A' category, improvement in operations is concentrated in the 'A+' and 'A' ratings while 'A-' operating margins have remained flat. The 'BBB' and speculative-grade categories have posted negative median operating results for the past two years, although median maximum annual debt service (MADS) coverage improved in the 'BBB' category and has not dropped below the 1x threshold for speculative-grade hospitals. Nevertheless, debt service coverage covenant risk remains an issue for speculative-grade hospitals and could lead to a technical event of default if operations and cash flow do not improve. Higher dependence on nonrecurring revenue such as stimulus funds and FEMA in 2022 may be contributing to higher losses in the 'BBB-' and speculative-grade categories in 2023 as those nonrecurring revenues taper and there is limited traction with operating improvement initiatives. Furthermore, median salaries and benefits as a percent of net patient revenue also continues to rise except in the 'A' rating category, given the ongoing labor shortage in the sector and higher underlying salary and benefit expense structures.

Liquidity ratios improved, but days' cash fell for certain rating categories.   In general, liquidity and financial flexibility metrics have stabilized with stronger unrestricted reserves relative to debt although expense inflation has eroded days' cash on hand, which decreased slightly in all rating categories except 'AA'. Although there is less difference now relative to DCOH and cash to debt among the rating levels in the 'AA' category, MADS coverage and excess margins remain differentiators between the higher- and lower-rated 'AA' organizations.

Debt-related metrics remain stable as issuers eye increased spending.   Leverage, measured by debt as a percent of capitalization and the debt burden, remained generally stable although increased debt issuance in 2024 could contribute to change in these metrics next year. Debt issuances have been largely to address deferred and strategic capital priorities, reflected in a higher average age of plant in most rating categories. This is despite healthy capital spending at all rating levels above 1.2x depreciation expense except for the 'BBB' and speculative-grade categories, likely given their weaker cash flow. For most rating levels, the defined pension plan funding status has improved, with higher interest rates providing possible funding relief for lower-rated organizations, especially in the speculative-grade category. While the pension funded status of the 'AA+' and 'AA' rating categories has dropped below 90%, which is the lowest level besides 'BBB-', there remains runway at the higher rating level to absorb some decrease in the pension funded status, given organizations' high levels of unrestricted resources.

Table 1

U.S. not-for-profit stand-alone hospital medians by rating category -- 2023 vs. 2022 vs. 2021
AA A BBB Speculative-grade
Fiscal year 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021
Sample size 35 39 39 92 89 97 61 59 68 27 27 31
Financial performance
Net patient revenue (NPR) ($000s) 1,520,710 1,383,205 1,121,775 572,363 585,304 505,430 406,053 447,332 381,763 317,835 299,128 178,450
Total operating revenue ($000s) 1,793,059 1,708,431 1,456,287 608,974 602,011 532,808 434,090 489,282 431,818 350,038 329,060 217,105
Total operating expenses ($000s) 1,763,730 1,659,360 1,362,371 578,536 619,798 518,839 443,346 484,439 413,070 370,024 352,966 238,111
Operating income ($000s) 37,883 50,694 53,930 4,396 962 13,969 (4,737) (6,284) 9,289 (13,870) (9,354) 4,475
Operating margin (%) 3.0 4.3 5.1 0.9 0.4 3.8 (1.0) (1.7) 2.5 (3.8) (1.1) 1.5
Net nonoperating income ($000s) 58,863 37,255 55,251 11,900 11,630 17,876 7,153 5,158 7,922 4,168 2,210 1,485
Excess income ($000s) 97,719 104,718 159,152 13,388 9,955 38,852 1,063 (1,592) 16,930 (8,533) (3,758) 6,228
Excess margin (%) 5.3 6.8 9.8 3.3 2.7 7.2 0.3 (0.3) 4.6 (2.0) (0.7) 3.1
Operating EBIDA margin (%) 8.7 9.8 11.0 6.6 6.5 9.3 4.9 3.8 9.0 1.7 1.9 6.7
EBIDA margin (%) 11.0 13.0 15.6 8.9 8.5 13.0 6.2 5.2 10.6 2.7 4.5 8.8
Net available for debt service ($000s) 214,879 165,289 242,493 44,676 38,761 76,440 23,117 28,677 45,988 11,058 11,465 17,867
Maximum annual debt service ($000s) 30,095 26,182 24,237 15,231 12,016 13,170 11,864 13,384 13,249 8,046 8,046 7,340
Maximum annual debt service coverage (x) 5.8 6.5 8.0 3.6 3.9 5.5 2.4 1.8 3.7 1.0 1.4 2.4
Operating lease-adjusted coverage (x) 4.5 5.3 6.4 2.8 3.1 4.6 1.9 1.6 3.3 1.0 1.3 2.1
Liquidity and financial flexibility
Unrestricted reserves ($000s) 1,446,359 1,277,939 1,299,068 392,654 372,986 424,577 175,149 201,884 183,364 64,638 64,838 56,252
Unrestricted days' cash on hand 360.2 335.5 423.9 243.0 257.9 308.7 133.0 148.6 185.9 75.5 89.2 112.2
Unrestricted reserves/total long-term debt (%) 314.2 300.2 370.2 209.0 202.4 243.2 142.9 128.2 148.1 63.8 62.5 78.5
Unrestricted reserves/contingent liabilities (%)* 1,590.7 1,478.2 1,391.7 1,006.9 909.8 876.5 668.9 769.0 779.6 323.5 813.1 333.9
Average age of plant (years) 11.2 11.2 11.0 12.7 12.5 12.1 13.3 12.9 13.8 14.8 14.3 14.1
Capital expenditures/depreciation and amortization (%) 132.2 138.2 123.0 126.4 119.0 107.9 96.1 106.8 86.6 108.9 114.7 79.1
Debt and liabilities
Total long-term debt ($000s) 447,426 373,278 342,465 188,405 162,337 149,778 122,599 188,494 144,730 98,599 107,721 81,344
Long-term debt/capitalization (%) 18.1 19.7 18.0 25.4 25.1 23.7 33.4 36.0 35.3 52.4 51.0 47.0
Contingent liabilities ($000s)* 77,600 104,900 115,873 51,450 50,000 52,363 29,055 31,130 35,805 22,336 7,900 10,000
Contingent liabilities/total long-term debt (%)* 16.8 19.3 23.7 25.1 24.4 26.3 19.3 14.8 18.7 16.3 6.8 13.6
Debt burden (%) 1.9 1.9 1.9 2.4 2.4 2.4 2.4 2.7 2.8 2.7 3.0 2.9
Defined-benefit plan funded status (%)* 98.3 98.6 97.5 93.2 91.8 89.3 92.8 96.9 91.6 90.8 83.6 80.3
Miscellaneous
Salaries & benefits/NPR (%) 61.1 59.0 58.9 57.4 58.0 55.8 58.5 57.1 57.4 58.0 55.9 56.8
Nonoperating revenue/total revenue (%) 3.0 2.4 4.7 2.0 2.1 3.5 1.4 1.2 1.7 1.2 0.6 0.8
Cushion ratio (x) 43.3 44.9 48.7 28.3 27.6 32.0 15.2 15.8 16.7 6.7 7.3 7.8
Days in accounts receivable 52.4 52.6 54.8 47.0 47.7 48.9 47.7 46.8 44.5 46.4 45.4 44.6
Cash flow/total liabilities (%) 18.6 21.0 24.8 14.8 14.2 18.3 8.9 7.1 14.1 2.4 4.6 9.6
Pension-adjusted long-term debt/capitalization (%)* 17.8 18.9 17.5 25.7 25.8 24.9 34.1 37.2 35.3 54.7 51.0 47.1
Adjusted operating margin (%)§ 2.3 2.7 3.0 0.7 (0.4) 0.8 (1.3) (2.6) 0.1 (3.9) (5.5) (0.9)
*These ratios are only for organizations that have defined-benefit pension plans or contingent liabilities. §Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to stimulus funding, FEMA reimbursement, and 340B settlement funding, but could comprise other nonrecurring items.

Table 2A

U.S. not-for-profit stand-alone hospital medians by rating level -- 2023 vs. 2022 vs. 2021
AA+/AA AA-
Fiscal year 2023 2022 2021 2023 2022 2021
Sample size 14 13 11 21 26 28
Financial performance
Net patient revenue (NPR) ($000s) 1,971,127 1,747,044 1,348,121 1,069,229 1,045,723 943,415
Total operating revenue ($000s) 2,745,811 2,387,171 2,194,482 1,116,021 1,120,920 994,416
Total operating expenses ($000s) 2,430,622 2,064,331 1,815,681 1,145,034 1,056,828 996,608
Operating income ($000s) 138,124 172,434 191,289 25,596 43,814 48,200
Operating margin (%) 5.0 7.8 7.1 1.3 3.1 3.6
Net nonoperating income ($000s) 75,694 24,137 103,273 40,719 39,540 47,279
Excess income ($000s) 200,664 236,017 292,745 52,037 85,293 107,381
Excess margin (%) 8.0 8.2 11.6 4.8 6.8 9.3
Operating EBIDA margin (%) 11.0 12.1 14.8 8.0 9.0 9.7
EBIDA margin (%) 14.1 13.0 19.3 9.4 12.9 14.0
Net available for debt service ($000s) 333,272 360,002 411,003 137,325 151,655 175,225
Maximum annual debt service ($000s) 53,216 52,086 57,134 23,049 21,669 21,054
Maximum annual debt service coverage (x) 7.2 5.4 8.8 4.9 6.6 7.8
Operating lease-adjusted coverage (x) 5.7 5.3 7.0 3.9 5.3 6.2
Liquidity and financial flexibility
Unrestricted reserves ($000s) 1,893,199 1,769,902 1,730,552 1,077,922 1,031,303 1,073,707
Unrestricted days' cash on hand 374.3 425.8 568.0 324.3 320.8 403.9
Unrestricted reserves/total long-term debt (%) 305.6 337.8 408.7 315.1 299.7 347.6
Unrestricted reserves/contingent liabilities (%)* 1,565.7 1,203.8 2,328.2 1,601.5 1,478.8 1,316.1
Average age of plant (years) 10.1 11.0 10.5 11.4 11.3 12.1
Capital expenditures/depreciation and amortization (%) 159.4 192.3 159.0 121.3 119.2 101.5
Debt and liabilities
Total long-term debt ($000s) 793,553 798,046 589,909 285,689 296,713 280,159
Long-term debt/capitalization (%) 18.3 19.6 17.2 18.1 20.6 18.1
Contingent liabilities ($000s)* 178,270 164,363 155,870 70,018 79,975 112,097
Contingent liabilities/total long-term debt (%)* 19.4 21.1 15.5 16.4 19.3 26.8
Debt burden (%) 2.0 2.1 2.2 1.9 1.8 1.8
Defined-benefit plan funded status (%)* 88.0 104.9 97.4 100.4 98.2 97.5
Miscellaneous
Salaries & benefits/NPR (%) 61.5 61.1 59.4 61.1 58.2 58.7
Nonoperating revenue/total revenue (%) 3.4 1.7 6.4 2.7 3.3 4.2
Cushion ratio (x) 42.1 49.9 57.9 46.2 43.4 47.1
Days in accounts receivable 56.4 55.2 56.6 50.2 48.4 47.8
Cash flow/total liabilities (%) 24.5 20.8 30.3 18.5 21.1 24.2
Pension-adjusted long-term debt/capitalization (%)* 18.3 18.6 17.4 16.9 19.2 18.1
Adjusted operating margin (%)§ 5.0 7.6 5.3 1.2 2.5 2.2
*These ratios are only for organizations that have defined-benefit pension plans or contingent liabilities. §Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to stimulus funding, FEMA reimbursement, and 340B settlement funding, but could comprise other nonrecurring items.

Table 2B

U.S. not-for-profit stand-alone hospital medians by rating level -- 2023 vs. 2022 vs. 2021
A+ A A-
Fiscal year 2023 2022 2021 2023 2022 2021 2023 2022 2021
Sample size 23 22 27 39 34 36 30 33 34
Financial performance
Net patient revenue (NPR) ($000s) 698,193 690,129 692,331 647,105 645,171 602,423 342,270 333,417 329,938
Total operating revenue ($000s) 744,406 735,651 743,144 694,948 697,451 640,276 437,035 345,502 353,083
Total operating expenses ($000s) 773,336 746,478 748,997 710,876 716,214 629,929 425,084 347,215 345,973
Operating income ($000s) 8,666 3,229 26,989 4,549 2,154 21,041 699 821 7,128
Operating margin (%) 1.6 0.6 4.7 0.8 0.2 3.3 0.4 0.4 2.8
Net nonoperating income ($000s) 21,374 21,777 43,380 11,345 15,266 12,047 7,805 6,351 11,182
Excess income ($000s) 31,965 21,044 86,717 9,724 9,302 37,894 5,882 9,073 19,669
Excess margin (%) 4.3 3.1 8.7 2.0 1.9 6.3 2.9 4.2 6.7
Operating EBIDA margin (%) 7.1 6.6 11.2 6.5 4.9 9.3 5.8 7.0 8.7
EBIDA margin (%) 10.7 8.9 14.6 8.3 7.2 11.9 9.2 8.9 12.7
Net available for debt service ($000s) 64,860 62,241 126,722 42,030 38,167 74,108 37,522 28,345 50,992
Maximum annual debt service ($000s) 24,199 21,325 20,800 15,231 12,855 11,602 12,274 9,194 9,904
Maximum annual debt service coverage (x) 4.6 4.2 6.7 3.4 3.5 5.4 3.4 4.3 5.0
Operating lease-adjusted coverage (x) 3.3 2.9 5.5 2.8 3.0 4.6 2.8 3.4 4.1
Liquidity and financial flexibility
Unrestricted reserves ($000s) 702,205 663,419 814,989 315,109 346,230 366,387 255,531 243,833 309,649
Unrestricted days' cash on hand 390.5 361.6 387.3 200.6 231.9 261.3 243.0 234.4 301.6
Unrestricted reserves/total long-term debt (%) 240.6 286.2 302.9 204.4 194.5 224.3 173.2 188.2 210.7
Unrestricted reserves/contingent liabilities (%)* 1,029.4 859.3 1,250.8 987.4 696.2 812.6 983.8 1,060.2 646.5
Average age of plant (years) 12.2 12.8 11.5 13.1 12.0 12.3 12.4 13.2 12.7
Capital expenditures/depreciation and amortization (%) 127.4 130.7 96.3 130.7 131.7 114.7 124.9 103.7 110.8
Debt and liabilities
Total long-term debt ($000s) 316,908 230,619 224,762 198,941 191,721 146,634 142,241 106,595 118,782
Long-term debt/capitalization (%) 24.2 21.4 20.6 25.6 27.1 25.0 28.5 25.3 25.3
Contingent liabilities ($000s)* 90,195 100,000 60,299 53,213 59,845 52,608 42,430 32,975 50,280
Contingent liabilities/total long-term debt (%)* 28.9 27.9 19.4 22.5 24.4 26.3 22.4 23.9 38.3
Debt burden (%) 2.2 2.4 2.4 2.3 2.4 2.3 2.6 2.4 2.6
Defined-benefit plan funded status (%)* 93.7 89.4 95.8 98.4 98.1 88.6 90.8 91.3 89.3
Miscellaneous
Salaries & benefits/NPR (%) 59.4 58.6 55.5 56.8 55.8 54.5 57.4 58.0 56.7
Nonoperating revenue/total revenue (%) 3.2 3.0 5.8 1.8 2.2 2.6 2.1 1.9 2.9
Cushion ratio (x) 33.8 34.6 40.0 25.7 27.6 30.5 25.1 24.1 25.5
Days in accounts receivable 47.2 48.0 52.0 47.1 48.3 48.0 44.9 45.6 48.2
Cash flow/total liabilities (%) 17.8 14.8 23.1 14.6 11.6 16.2 13.3 15.9 18.0
Pension-adjusted long-term debt/capitalization (%)* 24.7 21.6 21.0 25.6 27.4 26.9 30.1 27.0 25.7
Adjusted operating margin (%)§ 1.2 0.0 3.2 0.7 (0.5) 1.3 0.1 (1.6) 0.6
*These ratios are only for organizations that have defined-benefit pension plans or contingent liabilities. §Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to stimulus funding, FEMA reimbursement, and 340B settlement funding, but could comprise other nonrecurring items.

Table 2C

U.S. not-for-profit stand-alone hospital medians by rating level -- 2023 vs. 2022 vs. 2021
BBB+ BBB BBB- Speculative-grade
Fiscal year 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021
Sample size 22 26 25 22 19 24 17 14 19 27 27 31
Financial performance
Net patient revenue (NPR) ($000s) 371,467 444,511 343,171 451,225 447,332 356,571 400,607 466,422 417,020 317,835 299,128 178,450
Total operating revenue ($000s) 383,271 487,604 387,875 493,111 496,411 381,585 418,457 492,732 445,803 350,038 329,060 217,105
Total operating expenses ($000s) 380,229 482,377 375,626 520,811 505,022 376,308 466,862 498,587 454,729 370,024 352,966 238,111
Operating income ($000s) (4,503) (9,851) 13,254 (4,804) (4,470) 7,145 (4,515) (4,810) 6,554 (13,870) (9,354) 4,475
Operating margin (%) (0.9) (2.2) 3.4 (0.7) (1.1) 2.2 (2.1) (1.8) 2.0 (3.8) (1.1) 1.5
Net nonoperating income ($000s) 9,862 7,509 8,942 7,394 6,425 7,850 4,083 2,910 5,121 4,168 2,210 1,485
Excess income ($000s) 1,912 354 25,540 4,295 (1,592) 12,593 (2,145) (5,048) 16,762 (8,533) (3,758) 6,228
Excess margin (%) 0.9 0.2 5.3 1.0 (0.3) 3.6 (0.4) (1.5) 3.9 (2.0) (0.7) 3.1
Operating EBIDA margin (%) 5.0 3.2 9.8 5.1 4.4 8.1 2.8 4.2 6.9 1.7 1.9 6.7
EBIDA margin (%) 6.8 5.9 10.9 6.1 4.9 9.3 5.0 3.9 10.0 2.7 4.5 8.8
Net available for debt service ($000s) 26,677 29,487 54,341 25,858 32,608 44,333 20,580 20,645 46,129 11,058 11,465 17,867
Maximum annual debt service ($000s) 9,492 14,701 12,922 13,458 13,038 11,552 13,862 14,854 13,907 8,046 8,046 7,340
Maximum annual debt service coverage (x) 2.7 2.0 4.2 3.1 1.7 3.4 1.8 1.6 3.9 1.0 1.4 2.4
Operating lease-adjusted coverage (x) 2.4 1.7 4.0 2.5 1.5 2.9 1.6 1.3 3.3 1.0 1.3 2.1
Liquidity and financial flexibility
Unrestricted reserves ($000s) 210,514 223,353 227,189 167,831 222,661 171,165 134,520 143,633 175,469 64,638 64,838 56,252
Unrestricted days' cash on hand 172.0 158.3 207.2 125.9 145.7 172.9 111.5 135.6 160.7 75.5 89.2 112.2
Unrestricted reserves/total long-term debt (%) 150.8 129.2 148.1 153.1 157.4 187.1 102.7 100.4 111.9 63.8 62.5 78.5
Unrestricted reserves/contingent liabilities (%)* 664.7 769.0 779.6 745.8 1,198.0 575.6 822.0 594.5 2,100.2 323.5 813.1 333.9
Average age of plant (years) 12.4 13.0 13.8 12.9 12.8 12.8 14.1 13.9 15.3 14.8 14.3 14.1
Capital expenditures/depreciation and amortization (%) 99.0 128.2 112.8 101.8 108.1 83.5 91.5 73.3 81.1 108.9 114.7 79.1
Debt and liabilities
Total long-term debt ($000s) 119,308 197,599 162,752 108,153 160,569 144,730 225,927 197,735 135,091 98,599 107,721 81,344
Long-term debt/capitalization (%) 27.8 34.2 33.2 30.3 35.7 30.4 48.4 41.0 42.6 52.4 51.0 47.0
Contingent liabilities ($000s)* 31,060 35,248 50,000 23,790 18,648 24,985 35,972 37,955 10,460 22,336 7,900 10,000
Contingent liabilities/total long-term debt (%)* 23.7 18.8 25.7 11.6 12.0 15.6 14.7 17.5 6.7 16.3 6.8 13.6
Debt burden (%) 2.4 2.7 2.7 2.2 2.5 2.8 3.0 2.7 2.8 2.7 3.0 2.9
Defined-benefit plan funded status (%)* 93.1 99.3 89.2 100.8 90.0 94.7 86.3 96.4 91.6 90.8 83.6 80.3
Miscellaneous
Salaries & benefits/NPR (%) 57.0 57.6 55.6 63.0 56.2 57.4 56.9 58.3 58.6 58.0 55.9 56.8
Nonoperating revenue/total revenue (%) 1.7 1.4 2.5 1.3 0.9 1.5 1.2 0.9 1.4 1.2 0.6 0.8
Cushion ratio (x) 17.0 16.7 21.4 13.9 15.8 16.0 11.3 12.6 14.7 6.7 7.3 7.8
Days in accounts receivable 47.8 48.4 49.3 48.2 49.8 44.5 46.3 44.6 42.6 46.4 45.4 44.6
Cash flow/total liabilities (%) 9.9 8.4 18.0 9.6 5.2 13.8 4.3 6.8 12.5 2.4 4.6 9.6
Pension-adjusted long-term debt/capitalization (%)* 28.5 33.9 33.2 32.6 37.2 33.0 48.8 41.0 45.1 54.7 51.0 47.1
Adjusted operating margin (%)§ (2.0) (3.9) 0.4 (0.9) (1.7) 0.0 (2.1) (3.3) (1.6) (3.9) (5.5) (0.9)
*These ratios are only for organizations that have defined-benefit pension plans or contingent liabilities. §Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to stimulus funding, FEMA reimbursement, and 340B settlement funding, but could comprise other nonrecurring items.

Table 3

U.S. not-for-profit stand-alone hospital median analysis -- 2023 vs. 2022 vs. 2019
2023 2022 2019
Selected financial metrics Medians - lower half Medians - overall Medians - upper half Medians - lower half Medians - overall Medians - upper half Medians - lower half Medians - overall Medians - upper half
Operating margin (%) (3.5) 0.0 3.2 (3.5) 0.4 4.0 (0.3) 2.1 4.4
EBIDA margin (%) 4.3 7.8 11.7 4.0 7.7 12.7 7.6 10.2 13.7
Maximum annual debt service coverage (x) 1.6 3.1 5.0 1.5 3.4 5.6 2.5 3.7 5.8
Unrestricted days' cash on hand 124.8 199.8 317.3 137.4 215.3 334.0 141.9 205.7 304.4
Unrestricted reserves/total long-term debt (%) 111.7 187.0 305.6 110.2 175.5 290.5 104.8 185.0 282.4

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 audited financial statements used for medians and in our analysis include both obligated and nonobligated group members. For the medians, unrestricted reserves exclude Medicare advance payments, and total operating revenue includes all recognized stimulus funding, FEMA reimbursement, and 340B settlement funding.

Related Research

Glossary
Quarterly rating actions

This report does not constitute a rating action.

Primary Credit Analysts:Blake C Fundingsland, Englewood + 1 (303) 721 4703;
blake.fundingsland@spglobal.com
Cynthia S Keller, Augusta + 1 (212) 438 2035;
cynthia.keller@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, CRISIL Global Analytical Center, an S&P affiliate, Mumbai
Akul Patel, CRISIL Global Analytical Center, an S&P affiliate, Mumbai
Kunal Salunke, CRISIL Global Analytical Center, an S&P affiliate, Mumbai
Additional Contact:Chloe A Pickett, Englewood + 1 (303) 721 4122;
Chloe.Pickett@spglobal.com

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