Report Raises Concern Over Hospitals' Finances

A recent report by the state's Division of Health Care Finance and Policy is cause for concern, according to the Massachusetts Hospital Association (MHA).

As a new health care cost containment law puts pressure on hospitals to lower costs, the state's Acute Hospital Performance Report for fiscal year 2011 shows that hospital finances show more strain in 2011 than in 2010.

According to the report, 24 out of 65 hospitals in the state (37 percent) reported total margin losses in 2011, meaning their expenses related to patient care outpaced revenue. That was up from 16 hospitals (25 percent) in 2010. Central Massachusetts hospitals that saw total margin losses were Steward Nashoba Valley Medical Center (-1.1 percent), Heywood Hospital (-1.3 percent), Athol Memorial Hospital (-2.3 percent) and MetroWest Medical Center (-7.1 percent). Milford Regional Medical Center faired the best at 5.9 percent, followed by Clinton Hospital with 3.4 percent, UMass Memorial Medical Center at 3.1 percent, Saint Vincent Hospital at 1.9 percent and Marlborough Hospital with 1.7.

Median margins for all types of hospitals -- teaching, community and disproportionate share hospitals – decreased. MHA said its analysis of the report found that the most vulnerable hospitals experienced the biggest margin drop.

It also showed that 60 percent of hospitals have operating margins below 3 percent, which MHA said is the generally accepted national benchmark, used to determine a hospital's financial health. The median total margin declined from 2.6 percent in 2010 to 2.1 percent in 2011.

The news was better when it came to hospitals' liquidity, which remained largely unchanged year-over-year. The current ratio, measuring the short-term financial health of an institution which indicated whether it's able to meet current needs with current assets, had a fairly stable median, changing from 1.55 in 2010 to 1.52 in 2011. The amount of hospitals showing values at or above the industry benchmark of 1.00 fell from 83 percent to 78 percent. However, MHA's Senior Director of Healthcare Finance and Research Anu Puri said it's of concern that median days cash on hand is 64.3 days as opposed to the national average of 113.3 days.

Cash flow to debt totally fell from 2010 with the median debt ratio dropping from 16.9 percent to 14.9 percent.

The average number of days it took hospitals to collect patient and payer payments remained fairly stable as well, moving from 37 days in 2010 to 38 days in 2011.

Gardner And Athol Hospitals To Form Alliance

Urgent Care Franchise Opens First MetroWest Location

Bay State Health Care, Take Two: Industry Players See Risks, Opportunity In New Law

Health Reform II: A Doctor's Diagnosis