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U.S. Not-For-Profit Health Care Stand-Alone Hospital Median Financial Ratios--2022

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U.S. Not-For-Profit Health Care Stand-Alone Hospital Median Financial Ratios--2022

Rating And Outlook Overview

Number of rated stand-alone hospitals has declined.   The number of stand-alone hospitals rated by S&P Global Ratings declined to 243 from 257 year over year, 88% of which are reflected in our 2022 medians. We continue to see transitions in the portfolio due to ongoing mergers and acquisitions, as well as a few stand-alone hospitals migrating to the system portfolio. While the number of stand-alone hospitals we rate has seen a slight multiyear decline, the drop was markedly higher this year as compared with the relative stability seen in last year's report, which was partly aided by new issuers accessing the bond market.

Rating distribution continues to demonstrate a widening gap in credit quality.   The largest proportion of stand-alone hospital ratings are in the 'A' category, followed by the 'BBB' category, which is historically consistent, though 2023 saw a decline in both categories. At the same time, we are seeing a larger number of ratings at the higher and lower ends of the rating spectrum relative to pre-pandemic figures, reflecting an increasing gap in credit quality, which can occur during periods of operating stress.

Stand-alone hospitals seeing slightly increased 'AA' category distribution.   While the median rating for stand-alone hospitals remains lower than the median rating for systems, 'A-' compared with 'A+' respectively, there was a slight increase in the percentage of 'AA' category stand-alone issuers and corresponding slight decrease in the percentage of 'AA' category system issuers in 2023. Highly rated stand-alone hospitals in the 'AA' category, about one-third of which are children's hospitals, displayed good performance in 2022. Furthermore, many of these issuers demonstrate healthy financial metrics despite the decline from fiscal 2021 medians because many have a stronger cushion relative to systems to achieve the same rating, and as such may have greater financial flexibility to absorb some level of operating weakness.

Large increase in negative outlooks compared with the previous year.   Negative outlooks now represent nearly a quarter of rated stand-alone hospitals, over 10% higher than 2022 yet just below a peak of 27% in 2020. However, despite the increase in unfavorable outlook revisions, the vast majority of the portfolio remains on a stable outlook. Further, while our sector outlook remains negative, there are still 14 stand-alone hospitals (about 6%) that maintain a positive outlook.

Chart 1

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Chart 2

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Key Median Takeaways

The operating volatility and continued rating transitions over the past year, coupled with various uneven revenue items related to provider relief funds, FEMA grants, and state supplemental programs, present some unique limitations in the comparison of medians across health care systems and stand-alone hospitals, as well as between rating categories and the prior year. Clear conclusions or developing trends could be somewhat challenging to identify without the benefit of an additional one to two years of data. For this report, we've provided an additional table of the overall stand-alone median data with lower and upper half medians for select financial metrics to highlight dispersion of the median data and also compared this with 2019, the last year of medians before the COVID-19 pandemic.

Revenue increased across rating categories.   Stand-alone hospitals experienced impressive growth in both net patient revenue and total operating revenue medians as compared with the previous year. Each rating category saw double-digit growth, compared with the overall 5% growth observed for health care systems. This healthy revenue growth could be a function of a variety of factors including rating transitions, recovery from COVID-19 pandemic driven decline in fiscal 2020, and increasing state and supplemental funding. In addition, the generally lower revenue base of stand-alone providers could cause the year-to-year variance from the aforementioned factors to be more impactful. However, weakened operating margins despite impressive revenue growth highlights the exceptional labor and inflationary pressure all providers experienced in fiscal 2022.

Operating margins and cash flow deteriorated across most rating levels.   Despite generally good revenue growth, stand-alone hospitals experienced declining operating performance and cash flow, as expected and in line with the larger portfolio, as year over year expenses increased at the same rate or more relative to revenue growth. Notably, all ratings in the 'BBB' category had negative operating margins. The combined 'AA+' and 'AA' rated level group was the only median subset to see an improved operating margin compared with fiscal 2021. In contrast, operating margins in fiscal 2022 declined for health care systems at the same rating levels. In conjunction with reduced operating income, investment market volatility resulted in much lower investment income, contributing to meaningfully weakened cash flow and maximum annual debt service coverage across the stand-alone portfolio.

Unrestricted reserves significantly deteriorated from exceptional fiscal 2021.   Following several years of growth, weakened cash flow and unrealized investment losses resulted in a significant drop in unrestricted reserves and related metrics. As such, days' cash on hand decreased by about 20% across each rating category, further exacerbated by inflationary pressure on expenses. This decline was consistent with system peers. In addition, capital expenditures increased across nearly all rating levels, with only 'A-' and 'BBB-' rated providers spending less than the prior year. While each rating level experienced declines in unrestricted reserves, 'AA' category ratings continue to generate metrics that we consider extremely strong.

Debt profiles generally stable with higher leverage driven by some increased debt as well as declining unrestricted net assets.   Median leverage for stand-alone hospitals rose across rating categories and most rating levels, though notably 'A-' and 'BBB-' rated stand-alone providers experienced stable and improved leverage, respectively. Somewhat offsetting higher leverage, defined-benefit pension plans funded status improved across the stand-alone portfolio, supported by rising discount rates. Further, aside from the 'AA+/AA' rating level, the other rating categories de-risked debt portfolios through reduced contingent liability exposure. As observed with health care systems, debt capacity across rating levels is primarily limited by weaker cash flow and unrestricted reserves.

Waning provider relief funding continued to support operations across lower rated issuers.   Though less pronounced at higher rating levels, provider relief funding continued to support operating performance in fiscal 2022. Providers at lower rating levels, particularly speculative grade ratings, benefitted meaningfully from these funds, as evidenced by the median operating margin that is far better than the adjusted operating margin that excludes provider relief funds. As provider relief funding continues to wane, there is some uncertainty around future underlying operating performance in fiscal 2023 absent the additional support.

Table 1

U.S. not-for-profit stand-alone hospital medians by rating category--2022 versus 2021 versus 2020
AA A BBB Speculative grade
Fiscal year 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020
Sample size 39 39 35 89 97 105 59 68 72 27 31 34
Financial performance
Net patient revenue ($000s) 1,383,205 1,121,775 985,255 585,304 505,430 512,008 447,332 381,763 357,024 299,128 178,450 140,387
Total operating revenue ($000s) 1,708,431 1,456,287 1,315,225 602,011 532,808 538,531 489,282 431,818 388,937 329,060 217,105 169,704
Total operating expenses ($000s) 1,659,360 1,362,371 MNR 619,798 518,839 MNR 484,439 413,070 MNR 352,966 238,111 MNR
Operating income ($000s) 50,694 53,930 MNR 962 13,969 MNR -6,284 9,289 MNR -9,354 4,475 MNR
Operating margin (%) 4.3 5.1 3.5 0.4 3.8 1.9 -1.7 2.5 0.7 -1.1 1.5 1.3
Net nonoperating income ($000s) 37,255 55,251 MNR 11,630 17,876 MNR 5,158 7,922 MNR 2,210 1,485 MNR
Excess income ($000s) 104,718 159,152 MNR 9,955 38,852 MNR -1,592 16,930 MNR -3,758 6,228 MNR
Excess margin (%) 6.8 9.8 6.7 2.7 7.2 4.1 -0.3 4.6 2.5 -0.7 3.1 2.6
Operating EBIDA margin (%) 9.8 11.0 9.8 6.5 9.3 8.3 3.8 9.0 7.3 1.9 6.7 6.8
EBIDA margin (%) 13.0 15.6 12.6 8.5 13.0 10.3 5.2 10.6 8.4 4.5 8.8 8.4
Net available for debt service ($000s) 165,289 242,493 163,169 38,761 76,440 52,457 28,677 45,988 32,873 11,465 17,867 14,812
Maximum annual debt service ($000s) 26,182 24,237 MNR 12,016 13,170 MNR 13,384 13,249 MNR 8,046 7,340 MNR
Maximum annual debt service coverage (x) 6.5 8.0 6.1 3.9 5.5 4.0 1.8 3.7 2.7 1.4 2.4 2.3
Operating lease-adjusted coverage (x) 5.3 6.4 4.5 3.1 4.6 3.4 1.6 3.3 2.3 1.3 2.1 2.0
Liquidity and financial flexibility
Unrestricted reserves ($000s) 1,277,939 1,299,068 1,141,448 372,986 424,577 391,409 201,884 183,364 182,276 64,838 56,252 43,214
Unrestricted days' cash on hand 335.5 423.9 354.8 257.9 308.7 295.9 148.6 185.9 171.7 89.2 112.2 111.0
Unrestricted reserves/total long-term debt (%) 300.2 370.2 292.3 202.4 243.2 218.1 128.2 148.1 134.1 62.5 78.5 93.4
Unrestricted reserves/contingent liabilities (%)* 1,478.2 1,391.7 960.8 909.8 876.5 846.0 769.0 779.6 411.4 813.1 333.9 284.0
Average age of plant (years) 11.2 11.0 11.1 12.5 12.1 11.9 12.9 13.8 13.7 14.3 14.1 13.8
Capital expenditures/depreciation and amortization (%) 138.2 123.0 126.1 119.0 107.9 114.9 106.8 86.6 86.4 114.7 79.1 74.0
Debt and liabilities
Total long-term debt ($000s) 373,278 342,465 MNR 162,337 149,778 MNR 188,494 144,730 MNR 107,721 81,344 MNR
Long-term debt/capitalization (%) 19.7 18.0 21.1 25.1 23.7 25.1 36.0 35.3 35.5 51.0 47.0 48.0
Contingent liabilities ($000s)* 104,900 115,873 MNR 50,000 52,363 MNR 31,130 35,805 MNR 7,900 10,000 MNR
Contingent liabilities/total long-term debt (%)* 19.3 23.7 27.8 24.4 26.3 26.8 14.8 18.7 27.1 6.8 13.6 16.2
Debt burden (%) 1.9 1.9 2.1 2.4 2.4 2.7 2.7 2.8 2.9 3.0 2.9 3.5
Defined-benefit plan funded status (%)* 98.6 97.5 92.5 91.8 89.3 77.1 96.9 91.6 81.9 83.6 80.3 69.6
Miscellaneous
Salaries & benefits/NPR (%) 59.0 58.9 61.3 58.0 55.8 58.1 57.1 57.4 59.4 55.9 56.8 60.1
Nonoperating revenue/total revenue (%) 2.4 4.7 2.6 2.1 3.5 2.2 1.2 1.7 1.2 0.6 0.8 1.0
Cushion ratio (x) 44.9 48.7 41.5 27.6 32.0 28.1 15.8 16.7 15.8 7.3 7.8 9.7
Days in accounts receivable 52.6 54.8 49.7 47.7 48.9 44.8 46.8 44.5 44.7 45.4 44.6 45.0
Cash flow/total liabilities (%) 21.0 24.8 17.9 14.2 18.3 13.9 7.1 14.1 9.2 4.6 9.6 8.0
Pension-adjusted long-term debt/capitalization (%)* 18.9 17.5 21.7 25.8 24.9 27.3 37.2 35.3 37.1 51.0 47.1 52.0
Adjusted operating margin (%)§ 2.7 3.0 MNR -0.4 0.8 MNR -2.6 0.1 MNR -5.5 -0.9 MNR
MNR--median not reported. *These ratios are only for organizations that have defined-benefit (DB) pension plans or contingent liabilities. §Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to pandemic related relief funds recognized, but could comprise other nonrecurring items.

Table 2A

U.S. not-for-profit stand-alone hospital medians by rating level--2022 versus 2021 versus 2020
AA+/AA† AA-
Fiscal year 2022 2021 2020 2022 2021 2020
Sample size 13 11 11 26 28 24
Financial performance
Net patient revenue ($000s) 1,747,044 1,348,121 1,212,109 1,045,723 943,415 881,434
Total operating revenue ($000s) 2,387,171 2,194,482 1,965,180 1,120,920 994,416 984,770
Total operating expenses ($000s) 2,064,331 1,815,681 MNR 1,056,828 996,608 MNR
Operating income ($000s) 172,434 191,289 MNR 43,814 48,200 MNR
Operating margin (%) 7.8 7.1 6.1 3.1 3.6 3.0
Net nonoperating income ($000s) 24,137 103,273 MNR 39,540 47,279 MNR
Excess income ($000s) 236,017 292,745 MNR 85,293 107,381 MNR
Excess margin (%) 8.2 11.6 9.0 6.8 9.3 6.2
Operating EBIDA margin (%) 12.1 14.8 12.4 9.0 9.7 8.7
EBIDA margin (%) 13.0 19.3 14.9 12.9 14.0 12.6
Net available for debt service ($000s) 360,002 411,003 238,224 151,655 175,225 134,766
Maximum annual debt service ($000s) 52,086 57,134 MNR 21,669 21,054 MNR
Maximum annual debt service coverage (x) 5.4 8.8 5.3 6.6 7.8 6.1
Operating lease-adjusted coverage (x) 5.3 7.0 4.4 5.3 6.2 4.5
Liquidity and financial flexibility
Unrestricted reserves ($000s) 1,769,902 1,730,552 1,303,236 1,031,303 1,073,707 906,282
Unrestricted days' cash on hand 425.8 568.0 452.5 320.8 403.9 347.7
Unrestricted reserves/total long-term debt (%) 337.8 408.7 322.6 299.7 347.6 279.5
Unrestricted reserves/contingent liabilities (%)* 1,203.8 2,328.2 1,763.9 1,478.8 1,316.1 848.3
Average age of plant (years) 11.0 10.5 11.1 11.3 12.1 11.3
Capital expenditures/depreciation and amortization (%) 192.3 159.0 180.9 119.2 101.5 114.2
Debt and liabilities
Total long-term debt ($000s) 798,046 589,909 MNR 296,713 280,159 MNR
Long-term debt/capitalization (%) 19.6 17.2 18.3 20.6 18.1 21.6
Contingent liabilities ($000s)* 164,363 155,870 MNR 79,975 112,097 MNR
Contingent liabilities/total long-term debt (%)* 21.1 15.5 22.6 19.3 26.8 40.6
Debt burden (%) 2.1 2.2 2.5 1.8 1.8 2.0
Defined-benefit plan funded status (%)* 104.9 97.4 86.5 98.2 97.5 94.3
Miscellaneous
Salaries & benefits/NPR (%) 61.1 59.4 67.5 58.2 58.7 58.0
Nonoperating revenue/total revenue (%) 1.7 6.4 2.1 3.3 4.2 2.8
Cushion ratio (x) 49.9 57.9 43.6 43.4 47.1 41.4
Days in accounts receivable 55.2 56.6 52.6 48.4 47.8 47.9
Cash flow/total liabilities (%) 20.8 30.3 21.1 21.1 24.2 16.8
Pension-adjusted long-term debt/capitalization (%)* 18.6 17.4 21.6 19.2 18.1 21.9
Adjusted operating margin (%)§ 7.6 5.3 MNR 2.5 2.2 MNR
MNR--median not reported. *These ratios are only for organizations that have defined-benefit (DB) pension plans or contingent liabilities. §Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to pandemic-related relief funds recognized, but could comprise other nonrecurring items. †Includes 12 'AA' and one 'AA+' rated hospitals in 2022, 10 'AA' and one 'AA+' rated hospitals in 2021 and 2020.

Table 2B

U.S. not-for-profit stand-alone hospital medians by rating level--2022 versus 2021 versus 2020
A+ A A-
Fiscal year 2022 2021 2020 2022 2021 2020 2022 2021 2020
Sample size 22 27 29 34 36 41 33 34 35
Financial performance
Net patient revenue ($000s) 690,129 692,331 666,751 645,171 602,423 535,924 333,417 329,938 310,960
Total operating revenue ($000s) 735,651 743,144 698,144 697,451 640,276 570,917 345,502 353,083 336,696
Total operating expenses ($000s) 746,478 748,997 MNR 716,214 629,929 MNR 347,215 345,973 MNR
Operating income ($000s) 3,229 26,989 MNR 2,154 21,041 MNR 821 7,128 MNR
Operating margin (%) 0.6 4.7 2.1 0.2 3.3 0.6 0.4 2.8 1.6
Net nonoperating income ($000s) 21,777 43,380 MNR 15,266 12,047 MNR 6,351 11,182 MNR
Excess income ($000s) 21,044 86,717 MNR 9,302 37,894 MNR 9,073 19,669 MNR
Excess margin (%) 3.1 8.7 4.8 1.9 6.3 4.0 4.2 6.7 4.1
Operating EBIDA margin (%) 6.6 11.2 9.6 4.9 9.3 8.2 7.0 8.7 7.7
EBIDA margin (%) 8.9 14.6 11.3 7.2 11.9 10.1 8.9 12.7 10.1
Net available for debt service ($000s) 62,241 126,722 82,349 38,167 74,108 52,933 28,345 50,992 33,879
Maximum annual debt service ($000s) 21,325 20,800 MNR 12,855 11,602 MNR 9,194 9,904 MNR
Maximum annual debt service coverage (x) 4.2 6.7 4.7 3.5 5.4 3.7 4.3 5.0 3.5
Operating lease-adjusted coverage (x) 2.9 5.5 4.0 3.0 4.6 3.1 3.4 4.1 3.2
Liquidity and financial flexibility
Unrestricted reserves ($000s) 663,419 814,989 693,315 346,230 366,387 391,409 243,833 309,649 245,734
Unrestricted days' cash on hand 361.6 387.3 337.1 231.9 261.3 272.5 234.4 301.6 267.9
Unrestricted reserves/total long-term debt (%) 286.2 302.9 263.2 194.5 224.3 205.6 188.2 210.7 207.3
Unrestricted reserves/contingent liabilities (%)* 859.3 1,250.8 1,083.1 696.2 812.6 782.6 1,060.2 646.5 997.6
Average age of plant (years) 12.8 11.5 10.7 12.0 12.3 11.7 13.2 12.7 12.4
Capital expenditures/depreciation and amortization (%) 130.7 96.3 110.0 131.7 114.7 101.9 103.7 110.8 126.0
Debt and liabilities
Total long-term debt ($000s) 230,619 224,762 MNR 191,721 146,634 MNR 106,595 118,782 MNR
Long-term debt/capitalization (%) 21.4 20.6 23.8 27.1 25.0 25.7 25.3 25.3 27.1
Contingent liabilities ($000s)* 100,000 60,299 MNR 59,845 52,608 MNR 32,975 50,280 MNR
Contingent liabilities/total long-term debt (%)* 27.9 19.4 25.3 24.4 26.3 29.7 23.9 38.3 23.4
Debt burden (%) 2.4 2.4 2.4 2.4 2.3 2.6 2.4 2.6 2.9
Defined-benefit plan funded status (%)* 89.4 95.8 72.1 98.1 88.6 80.7 91.3 89.3 76.9
Miscellaneous
Salaries and benefits/NPR (%) 58.6 55.5 57.4 55.8 54.5 58.9 58.0 56.7 58.0
Nonoperating revenue/total revenue (%) 3.0 5.8 2.4 2.2 2.6 2.4 1.9 2.9 2.2
Cushion ratio (x) 34.6 40.0 38.7 27.6 30.5 27.5 24.1 25.5 23.3
Days in accounts receivable 48.0 52.0 46.6 48.3 48.0 44.5 45.6 48.2 44.4
Cash flow/total liabilities (%) 14.8 23.1 15.9 11.6 16.2 12.3 15.9 18.0 13.9
Pension-adjusted long-term debt/capitalization (%)* 21.6 21.0 25.1 27.4 26.9 28.2 27.0 25.7 27.8
Adjusted operating margin (%)§ 0.0 3.2 MNR -0.5 1.3 MNR -1.6 0.6 MNR
MNR--median not reported. *These ratios are only for organizations that have defined-benefit (DB) pension plans or contingent liabilities. §Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to pandemic related relief funds recognized, but could comprise other nonrecurring items.

Table 2C

U.S. not-for-profit stand-alone hospital medians by rating level--2022 versus 2021 versus 2020
BBB+ BBB BBB- Speculative grade
Fiscal year 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020
Sample size 26 25 25 19 24 25 14 19 22 27 31 34
Financial performance
Net patient revenue ($000s) 444,511 343,171 386,130 447,332 356,571 246,562 466,422 417,020 410,931 299,128 178,450 140,387
Total operating revenue ($000s) 487,604 387,875 423,312 496,411 381,585 315,900 492,732 445,803 453,536 329,060 217,105 169,704
Total operating expenses ($000s) 482,377 375,626 MNR 505,022 376,308 MNR 498,587 454,729 MNR 352,966 238,111 MNR
Operating income ($000s) -9,851 13,254 MNR -4,470 7,145 MNR -4,810 6,554 MNR -9,354 4,475 MNR
Operating margin (%) -2.2 3.4 0.7 -1.1 2.2 0.0 -1.8 2.0 0.8 -1.1 1.5 1.3
Net nonoperating income ($000s) 7,509 8,942 MNR 6,425 7,850 MNR 2,910 5,121 MNR 2,210 1,485 MNR
Excess income ($000s) 354 25,540 MNR -1,592 12,593 MNR -5,048 16,762 MNR -3,758 6,228 MNR
Excess margin (%) 0.2 5.3 2.8 -0.3 3.6 2.0 -1.5 3.9 2.2 -0.7 3.1 2.6
Operating EBIDA margin (%) 3.2 9.8 7.8 4.4 8.1 7.3 4.2 6.9 7.4 1.9 6.7 6.8
EBIDA margin (%) 5.9 10.9 9.5 4.9 9.3 8.2 3.9 10.0 8.3 4.5 8.8 8.4
Net available for debt service ($000s) 29,487 54,341 38,736 32,608 44,333 26,735 20,645 46,129 46,533 11,465 17,867 14,812
Maximum annual debt service ($000s) 14,701 12,922 MNR 13,038 11,552 MNR 14,854 13,907 MNR 8,046 7,340 MNR
Maximum annual debt service coverage (x) 2.0 4.2 2.7 1.7 3.4 2.8 1.6 3.9 2.6 1.4 2.4 2.3
Operating lease-adjusted coverage (x) 1.7 4.0 2.5 1.5 2.9 2.1 1.3 3.3 2.2 1.3 2.1 2.0
Liquidity and financial flexibility
Unrestricted reserves ($000s) 223,353 227,189 186,959 222,661 171,165 175,408 143,633 175,469 185,443 64,838 56,252 43,214
Unrestricted days' cash on hand 158.3 207.2 194.5 145.7 172.9 201.4 135.6 160.7 158.6 89.2 112.2 111.0
Unrestricted reserves/total long-term debt (%) 129.2 148.1 140.7 157.4 187.1 189.4 100.4 111.9 110.5 62.5 78.5 93.4
Unrestricted reserves/contingent liabilities (%)* 769.0 779.6 389.8 1,198.0 575.6 411.4 594.5 2,100.2 522.7 813.1 333.9 284.0
Average age of plant (years) 13.0 13.8 13.4 12.8 12.8 13.3 13.9 15.3 14.7 14.3 14.1 13.8
Capital expenditures/depreciation and amortization (%) 128.2 112.8 124.4 108.1 83.5 67.2 73.3 81.1 75.4 114.7 79.1 74.0
Debt and liabilities
Total long-term debt ($000s) 197,599 162,752 MNR 160,569 144,730 MNR 197,735 135,091 MNR 107,721 81,344 MNR
Long-term debt/capitalization (%) 34.2 33.2 30.9 35.7 30.4 29.1 41.0 42.6 42.8 51.0 47.0 48.0
Contingent liabilities ($000s)* 35,248 50,000 MNR 18,648 24,985 MNR 37,955 10,460 MNR 7,900 10,000 MNR
Contingent liabilities/total long-term debt (%)* 18.8 25.7 42.4 12.0 15.6 22.9 17.5 6.7 21.0 6.8 13.6 16.2
Debt burden (%) 2.7 2.7 2.7 2.5 2.8 2.9 2.7 2.8 2.9 3.0 2.9 3.5
Defined-benefit plan funded status (%)* 99.3 89.2 77.5 90.0 94.7 81.9 96.4 91.6 82.5 83.6 80.3 69.6
Miscellaneous
Salaries & benefits/NPR (%) 57.6 55.6 59.4 56.2 57.4 57.6 58.3 58.6 60.3 55.9 56.8 60.1
Nonoperating revenue/total revenue (%) 1.4 2.5 1.4 0.9 1.5 1.5 0.9 1.4 1.0 0.6 0.8 1.0
Cushion ratio (x) 16.7 21.4 17.5 15.8 16.0 16.7 12.6 14.7 12.7 7.3 7.8 9.7
Days in accounts receivable 48.4 49.3 46.8 49.8 44.5 43.6 44.6 42.6 44.2 45.4 44.6 45.0
Cash flow/total liabilities (%) 8.4 18.0 11.5 5.2 13.8 8.9 6.8 12.5 9.0 4.6 9.6 8.0
Pension-adjusted long-term debt/capitalization (%)* 33.9 33.2 31.9 37.2 33.0 35.0 41.0 45.1 44.4 51.0 47.1 52.0
Adjusted operating margin (%)§ -3.9 0.4 MNR -1.7 0.0 MNR -3.3 -1.6 MNR -5.5 -0.9 MNR
MNR--median not reported. *These ratios are only for organizations that have defined-benefit (DB) pension plans or contingent liabilities. §Adjusted operating margin excludes nonrecurring operating revenues that are largely attributable to pandemic related relief funds recognized, but could comprise other nonrecurring items.

Table 3

U.S. not-for-profit stand-alone hospital median analysis--2022 versus 2019
2022 2019
Medians - lower half Medians - overall Medians - upper half Medians - lower half Medians - overall Medians - upper half
Select financial metrics
Operating margin (%) -3.5 0.4 4.0 -0.3 2.1 4.4
EBIDA margin (%) 4.0 7.7 12.7 7.6 10.2 13.7
Maximum annual debt service coverage (x) 1.5 3.4 5.6 2.5 3.7 5.8
Unrestricted days' cash on hand 137.4 215.3 334.0 141.9 205.7 304.4
Unrestricted reserves/total long-term debt (%) 110.2 175.5 290.5 104.8 185.0 282.4

Ratio Analysis

We view ratio analysis as an important tool in our assessment of the credit quality of not-for-profit health care organizations in addition to other key considerations including our analysis of enterprise profile factors and forward-looking views relative to both the business and financial positions. The median ratios offer a snapshot of the financial profile and help in the comparison of issuers across rating categories. Tracking median ratios over time also presents a clearer understanding of industrywide trends and provides a tool to better assess the sector's future credit quality.

The financial statements used for medians and in our analysis include both obligated and nonobligated group members. For the 2020, 2021, and 2022 medians, unrestricted reserves exclude Medicare advance payments. All recognized CARES Act funding and other pandemic related relief is included in total operating revenue.

Related Research

Glossary of our ratios

Glossary: Not-For-Profit Health Care Organization Ratios, March 19, 2018

Quarterly rating actions

U.S. Not-For-Profit Health Care Rating Actions, March And First-Quarter 2023, April 25, 2023

This report does not constitute a rating action.

Primary Credit Analysts:Chloe A Pickett, Englewood + 1 (303) 721 4122;
Chloe.Pickett@spglobal.com
Patrick Zagar, Dallas + 1 (214) 765 5883;
patrick.zagar@spglobal.com
Secondary Contacts:Stephen Infranco, New York + 1 (212) 438 2025;
stephen.infranco@spglobal.com
Suzie R Desai, Chicago + 1 (312) 233 7046;
suzie.desai@spglobal.com
Research Contributors:Shrutika Joshi, Pune;
shrutika.joshi@spglobal.com
Akul Patel, Pune;
akul.patel@spglobal.com
Kunal Salunke, Mumbai;
kunal.salunke@spglobal.com

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