Margins among non-profit hospitals have rebounded completely from the Great Recession and have hit highs not seen in several years, according to Moody's Investors Service, which analyzed the numbers for 190 hospitals and healthcare systems.
Not-for-profit hospital revenue grew a preliminary median of 7.4 percent in 2015, up from 4.7 percent in 2014. The three-year compounded annual growth rate is 5.6 percent. That actually outstrips the 5.5 percent compounded growth rate in expenses--the first time that has occurred in five years.
That's a significant reversal in fortunes from just a couple of years ago, when Moody's noted that hospitals were under relentless pressure from mounting expenses.
Moreover, profit margins were also healthy. The median operating margin was 3.4 percent last year, while the operating cash flow margin was 10.3 percent.
"Stronger median annual revenue growth was driven by continued consolidation in the sector, benefits from gains in insurance coverage, and favorable utilization trends," Beth Wexler, vice president-senior credit officer at Moody's, said in a statement. The report also credited hospitals for showing strong discipline in controlling expenses.
Only last year, Moody's had relented on its negative forecast for non-profit hospitals--one that had been in place since the onset of the recession in 2008.
Although Moody's said in its most recent report that it expected medians to moderate as it finalizes its numbers for 2015, it remained steadfast in its forecast of stability for the non-profit hospital sector.
To learn more:
- read the Moody's statement