Becker's Hospital Review

9 CFO / FINANCE 10 health systems with strong finances By Andrew Cass H ere are 10 health systems with strong operational metrics and solid financial positions, according to reports from credit rating agencies Fitch Ratings and Moody's Investors Service. Note: is is not an exhaustive list. Health system names were compiled from credit rating reports. 1. Ascension has an "AA+" rating and stable outlook with Fitch. e St. Louis-based system's rating is driven by multiple factors, including a strong financial profile assessment, national size and scale with a significant market presence in several key markets, which produce unique credit features not typically seen in the sector, Fitch said. 2. ChristianaCare has an "Aa2" rating and stable outlook with Moody's. e Newark, Del.-based system has a unique position with the state's largest teaching hospital and extensive clinical depth that affords strong regional and statewide market capture, and it is expected to return to near pre-pandemic level margins over the medium-term, Moody's said. 3. Dayton (Ohio) Children's Hospital has an "AA-" and stable outlook with Fitch. e rating reflects the hospital's very healthy liquidity position and sound operating performance despite pandemic-related expense pressures, Fitch said. 4. Hackensack Meridian Health has an "AA-" rating and stable outlook with Fitch. e Edison, N.J.-based health system has shown consistent year-over-year increases in market share and has a solid liquidity position, Fitch said. 5. Johns Hopkins Medicine has an "AA-" rating and stable outlook with Fitch. e Baltimore-based system has a strong financial role as a major provider in the central Maryland and Washington, D.C., market, supported by its excellent clinical reputation with a regional, national and international reach, Fitch said. 6. Parkview Health has an "Aa3" rating and stable outlook with Moody's. e Fort Wayne, Ind.-based system has a leading market position with expansive tertiary and quaternary clinical services in Northeastern Indiana and Northwestern Ohio, Moody's said. 7. Rady Children's Hospital has an "AA" rating and stable outlook with Fitch. e San Diego-based hospital has a very strong balance sheet position and operating performance and is also a leading provider of pediatric services in the growing city and tri- county service area, Fitch said. 8. Salem (Ore.) Health has a "AA-" rating and stable outlook with Fitch. e rating reflects a "very strong" financial profile and a leading market share position, Fitch said. e flagship Salem Hospital, a 567-bed facility, is the only hospital in the city of Salem. 9. edaCare has an "AA-" rating and stable outlook with Fitch. e Neenah, Wis.-based system has a focused strategy, strong financial profile and robust market share, Fitch said. 10. TriHealth has an "AA-" rating and stable outlook with Fitch. e rating reflects the Cincinnati-based system's strong financial and operating profiles, as well as its broad reach, high-acuity services and stable market position in a highly fragmented and competitive market, Fitch said. n Hospital margins see eleventh-hour improvement By Molly Gamble H ospitals experienced a slight boost to operating margins in November, but not enough to restore the median negative margins that persisted throughout the first 11 months of 2022. Kaufman Hall's December "National Flash Hospital Report" — based on data from more than 900 hospitals — found hospitals' median operating margin was -0.2 percent through November, a slight improvement from the median of -0.3 percent recorded a month prior. A 1 percent decline in expenses from October to November drove the eleventh-hour improvement to margins and tipped the scales on hospitals' relatively flat revenue. Additionally, hospitals saw labor expenses decrease 2 percent in November, potentially driven by less reliance on contract labor. The median -0.2 percent margin recorded in November 2022 marks a 44 percent decline for margins in 22 year- to-date compared to 2021 year-to-date. Kaufman Hall's index shows hospitals' median monthly margins have been in the red throughout 2022, starting with the -3.4 percent recorded in January, driven by the omicron surge. November is tied with September as hospitals' best month of the year, with both sharing a median margin of -0.2 percent. Outpatient care marks one of the brighter spots for hospitals' finances, with outpatient revenue up 10 percent year-over-year while inpatient revenue was flat over the same time period. "The November data, while mildly improved compared to October, solidifies what has been a difficult year for hospitals amidst labor shortages, supply chain issues and rising interest rates," Erik Swanson, senior vice president of data and analytics with Kaufman Hall, said. "Hospital leaders should continue to develop their outpatient care capabilities amid ongoing industry uncertainty and transformation." n

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