Massachusetts Acute Hospital Financial Performance: Fiscal Year 2009 through Quarter 2

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• published: 01 Jun 2016
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Don't hesitate to comment below if you have any questions or additional phrases Massachusetts Acute Hospital Financial Performance: Fiscal Year 2009 through Quarter 2 Division of Health Care Finance and Policy August 2009 ,About this Report This report is prepared in response to M.G.L. c. 118G, section 6A, which requires the Division of Heath Care Finance and Policy (DHCFP) to assess and report on Massachusetts acute hospital financial performance. It provides a statewide analysis of acute hospital audited financial data over eight periods (fiscal year 2002 through quarter two of fiscal year 2009). The report examines hospital profitability, liquidity, and capital structure ratios in order to monitor the financial status of acute hospitals. Presented are industry analyses by quartiles and medians and comparisons of financial performance trends of different hospital cohorts: teaching, community, and disproportionate share hospitals. Caution should be taken when interpreting quarterly results as quarterly performance may not necessarily be indicative of year end results. The report is accompanied by individual hospital fact sheets detailing financial trends, which are available on the DHCFP website: www.mass.gov/dhcfp. Summary of Findings for Fiscal Year 2009 through Quarter 2 While the overall profitability of most Massachusetts acute care hospitals declined during the first two quarters of fiscal year 2009, operating margins increased for many hospitals during this same period. Operating margin is an important financial indicator as it reflects a hospital’s profitability with regards to its operating income. The decline in profitability for many hospitals during the first two quarters of fiscal year 2009 was primarily due to declines in non-operating income. The hospital market, along with many industries, has experienced the effect of the recent economic turmoil including the credit crisis, problems in variable rate debt markets, the recession, and equity market declines. The economic impact is most likely seen in non-operating income, which is derived primarily from income related to investments, including interest, dividends, and realized gains/losses on securities sales; it also reflects unrestricted charitable donations. Just over half of hospitals reported profitable financial performance; 53% reported positive total margins during the first two quarters of FY09 compared with 65% in FY08. Most hospitals (68%) reported operating profits and more than half of hospitals (55%) experienced non-operating losses during the first two quarters of FY09. Liquidity remained fairly stable: there was little change in the industry’s median days to collect revenue, the median current ratio improved slightly and the median days taken to pay bills shortened by three days during the first two quarters of FY09. Equity ratios declined primarily due to declining total income across the industry during the first two quarters of FY09. Teaching hospitals experienced significant declines in total margins reflecting the poor performance of non-operating revenues. Community hospitals’ median operating margin improved during the first two quarters of FY09 compared with FY08. Teaching hospitals took about eight days longer to collect revenue than community hospitals during the first two quarters of FY09. Disproportionate share hospitals’ median total margin improved during the first two quarters of FY09 compared with FY08. Both disproportionate share hospitals’ and all other hospitals’ median operating margin improved during this same time period. Disproportionate share hospitals took about five days longer to pay their bills than all other hospitals during the first two quarters of FY09. ,Acute Hospital Total Margin Many hospitals experienced declines in total profits with the financially weakest hospitals showing the steepest decline during the first two quarters of FY09. Thirty-one hospitals (47%) reported a total loss during the same period. Benchmark: Northeast US median FY07 = 2.7% Benchmark Source: 2009 Alm