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.
Chart 1
Chart 2
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
- U.S. Not-For-Profit Acute Health Care 2023 Medians: Remarkably Level With Prior Year, But Performance Remains Notably Below Historical Norms, Aug. 7, 2024
- U.S. Not-For-Profit Health Care System Median Financial Ratios--2023, Aug. 7, 2024
- U.S. Not-For-Profit Acute Health Care Speculative-Grade Median Financial Ratios--2023, Aug. 7, 2024
- U.S. Not-For-Profit Health Care Small Stand-Alone Hospital Median Financial Ratios--2023, Aug. 7, 2024
- U.S. Not-For-Profit Health Care Children’s Hospital Median Financial Ratios--2023, Aug. 7, 2024
- U.S. Not-For-Profit Health Care Outstanding Ratings And Outlooks As Of June 30, 2024, July 18, 2024
- U.S. Not-For-Profit Health Care Outstanding Ratings And Outlooks As Of June 30, 2024, July 18, 2024
- Preliminary 2023 Medians For U.S. Acute Health Care Providers Indicate Continued Operating Pressures For Many, April 30, 2024
- U.S. Not-For-Profit Acute Health Care Rating Actions, 2023 Year-End Review, Feb. 8, 2024
- U.S. Not-For-Profit Acute Health Care Providers 2024 Outlook: Historical Peak Of Negative Outlooks Signals Ongoing Challenges, Dec. 6, 2023
Glossary
- Glossary: Not-For-Profit Health Care Organization Ratios, March 19, 2018
Quarterly rating actions
- U.S. Not-For-Profit Health Care Rating Actions, June And Second Quarter 2024, July 12, 2024
- U.S. Not-For-Profit Health Care Rating Actions, March 2024, April 15, 2024
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 |
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.