If we said that 20% of any industry was at financial risk, we would all be up in arms. However, a recent Morgan Stanley report citing that statistic was met with some degree of yawning. The report cites that 450 hospitals are at risk of closure and another 600 are “weak”. 

 

With over 90% of hospitals now having reported financials to Centers for Medicare & Medicaid Services (CMS through HCRIS) for 2017, we took at look at the median financial metrics across the industry and are finding some alarming results:

  • Operating margin declined from 3.39% to 2.76%, a five year low (see image below).

  • Days cash on hand has dwindled to 26 days, a decline of 13% since 2013 with days cash on hand from short-term sources declining even further by nearly 30% to just over 10 days.

  • Fixed asset financing is also at a five-year low. One of the benchmarks of the Morgan Stanley report was a lack of capital improvements in the face of a need for increasing capacity.

  • On the positive side, the average payment period continues to decline and is also at a five-year low of 48.4 days.

The recently released Insight for Healthcare Interactive provides rapid insights into the healthcare provider ecosystem. The Advanced and Master versions contain financial and utilization metrics for over 7,000 hospitals with filters for geographies and hospital attributes.