Becker's Hospital Review

18 CFO / FINANCE 45 financial benchmarks for hospital executives By Ayla Ellison H ospital leaders across the nation use benchmarking as a way to determine the areas of their business that need improvement. e continuous process of benchmarking allows hospital executives to see how their organizations stack up against local and regional competitors as well as national leaders. Here are 45 benchmarks related to one of the most important day-to-day areas hospital ex- ecutives oversee — finance. Key ratios Source: Moody's Investors Service, "Not-for- profit and public healthcare – US: Medians" report, September 2019. e medians are based on an analysis of audit- ed fiscal 2018 financial statements for 284 free- standing hospitals, single-state health systems and multistate health systems, representing 79 percent of all Moody's-rated healthcare entities. Children's hospitals, hospitals for which five years of data are not available and certain spe- cialty hospitals were not eligible for inclusion in the medians. 1. Maintained bed occupancy: 66.6 percent 2. Operating margin: 1.8 percent 3. Excess margin: 4.3 percent 4. Operating cash flow margin: 7.9 percent 5. Return on assets: 3.6 percent 6. ree-year operating revenue CAGR: 5.6 percent 7. ree-year operating expense CAGR: 6.4 percent 8. Cash on hand: 200.9 days 9. Annual operating revenue growth rate: 5.5 percent 10. Annual operating expense growth rate: 5.4 percent 11. Total debt-to-capitalization: 33.7 percent 12. Total debt-to-operating revenue: 33.3 percent 13. Current ratio: 1.9x 14. Cushion ratio: 21.6x 15. Annual debt service coverage: 4.7x 16. Maximum annual debt service coverage: 4.4x 17. Debt-to-cash flow: 3.1x 18. Capital spending ratio: 1.2x 19. Accounts receivable: 45.9 days 20. Average payment period: 61.4 days 21. Average age of plant: 11.7 years Hospital margins by credit rating group Source: S&P Global Ratings "U.S. Not- For-Profit Health Care System Median Fi- nancial Ratios — 2018 vs. 2017" report, September 2019. AA+ rating 22. Operating margin: 5.5 percent 23. Operating EBIDA margin: 12 percent 24. Excess margin: 9.2 percent 25. EBIDA margin: 14.8 percent AA rating 26. Operating margin: 4.4 percent 27. Operating EBIDA margin: 10.1 percent 28. Excess margin: 6.7 percent 29. EBIDA margin: 12.4 percent AA- rating 30. Operating margin: 3.4 percent 31. Operating EBIDA margin: 9.5 percent 32. Excess margin: 4.0 percent 33. EBIDA margin: 10.4 percent A+ rating 34. Operating margin: 1.6 percent 35. Operating EBIDA margin: 7.4 percent 36. Excess margin: 3.3 percent 37. EBIDA margin: 10.1 percent A rating 38. Operating margin: 2.1 percent 39. Operating EBIDA margin: 7.6 percent 40. Excess margin: 3.3 percent 41. EBIDA margin: 8.6 percent A- rating 42. Operating margin: 1 percent 43. Operating EBIDA margin: 7.8 percent 44. Excess margin: 2.5 percent 45. EBIDA margin: 8.3 percent n Providence, Cedars-Sinai break ground on $542M expansion at jointly owned hospital By Alia Paavola P rovidence and Cedars-Sinai broke ground Feb. 10 on an expansion proj- ect at their jointly owned hospital in Los Angeles, according to the San Fernando Valley Business Journal. The expansion at the newly named Providence Cedars-Sinai Tarzana Medical Center is expected to cost $542 million and is slated to be completed in 2023. The expansion includes building a six-story, 223,000-square-foot patient tow- er, expanding the medical center's emergency department and adding space for more outpatient services. The project is a joint venture between Renton, Wash.-based Providence and Los Angeles-based Cedars-Sinai. The two organizations signed a co-ownership deal for Providence Tarzana early last year. Providence will retain controlling interest in the medical center. n

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