Moody's: Not-for-profit hospital operations worsened in 2008

Moody's was already down on not-for-profit hospitals last November when it revised its outlook on the sector from stable to negative. Now, with the full report out on 2008, Moody's pessimism has been somewhat vindicated.

During 2008, not-for-profits struggled with tight credit, eroding liquidity and weaker operations, according to Moody's researchers, who look at financial measures for 211 freestanding hospitals or health systems operating within a single state whose fiscal years closed at the end of June or September.

The hospitals saw a drop in cash reserves from 167 days during the prior year to 152 days in 2008. While that is already significant, what's worse is that the figures may fall another 22 to 30 days once analysts include financial results for hospitals with fiscal years ending Dec. 31.

Hospitals' mean operating margins, which have declined since 2005, continued to slide, hitting 2 percent for 2008, down from 2.4 the prior year. Median net margin fell to 4.5 percent in fiscal 2008, from 5.3 percent the previous year.

To learn more about these results:
- read this Modern Healthcare article (reg. req.)

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