Moody’s Releases 2014 Medians; Profitability and Growth Are Main Features

Not-for-profit hospitals and health systems healthcare medians for 2014 show improved profitability margins with balance sheet measures continuing their favorable trajectory, according to Moody’s Investors Service report on final medians for 2014.


The median highlights include:


Median annual revenue growth rate surpassed median expense growth rate by a wide margin in 2014. Median annual revenue growth was 5.2 percent; median expense growth was 4.6 percent. The spread in these growth rates is at an historic high. Consolidation in the hospital sector, benefits from enrollment in public exchanges and Medicaid expansion, and generally favorable utilization trends contributed to rising revenues.


Medicaid exposure grew markedly and there was continued growth in Medicare exposure. Self-pay declined and risk-based payment arrangements remained marginal. Median growth of government revenue streams increasing as the uninsured rate declines and transition to risk-based payment methodologies is gradual. Moody’s expects margins will remain pressured.


Profitability rebounds to 2012 levels; operating cash-flow growth surges. Operating cash flow growth is at a multi-year high while margins return to levels seen in 2011 and 2012, after weakening in 2013.


Sector-wide margin recovery and solid investment returns, accompanied by slowed capital spend, contributed to strengthened balance sheet measures. Median unrestricted cash and investments grew 10 percent in 2014 while median debt declined; 43 percent of the portfolio spent less than annual depreciation expense on capital.


(iProtean thanks Moody’s Investors Service for permission to quote from its report: “Strong Business Conditions Bolster Profitability and Growth, Moderating Fundamental Sector Risks,”  Moody’s Investors Service, September 10, 2015)



iProtean subscribers can access the full report, “Strong Business Conditions Bolster Profitability and Growth, Moderating Fundamental Sector Risks,” in the Resources section of the upcoming course, Integrating Population Health into Your Strategic and Financial Plans, Part One. This course will be published at the end of the month.




Consumerism: Strategic and Financial Implications, Part Two is in your library now. In this course, Mark Grube (Kaufman Hall), Marian Jennings (M. Jennings Consulting) and Nathan Kaufman (Kaufman Strategic Advisors) discuss organizational characteristics for a retail strategy, the financial implications and “must-do’s” for hospitals and systems. And coming up in late September, part one of Integrating Population Health into Your Strategic and Financial Plans.




For a complete list of iProtean courses, click here.


For more information about iProtean, click here.