Trends in Hospital Financing - AHA CHARTBOOK 2016 Trends in Hospital Financing. Chart 4.1:...

TRENDWATCH CHARTBOOK 2016Trends in Hospital Financing

Chart 4.1: Percentage of Hospitals with Negative Total and Operating Margins, 1995 2014

Source: Analysis of American Hospital Association Annual Survey data, 2014, for community hospitals.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Negative Operating Margin

Negative Total Margin


Chart 4.2: Aggregate Total Hospital Margins(1) and Operating Margins,(2)1994 2014

Total Margin

Operating Margin

0%

2%

4%

6%

8%

10%

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Source: Analysis of American Hospital Association Annual Survey data, 2014, for community hospitals. (1) Total Hospital Margin is calculated as the difference between total net revenue and total expenses divided by total net revenue.(2) Operating Margin is calculated as the difference between operating revenue and total expenses divided by operating revenue.

Chart1

0.0480.033594

0.0560.038895

0.0670.045596

0.0670.040497

0.0580.030898

0.0460.020899

0.0460.020300

0.0420.026901

0.0440.03702

0.0480.03303

0.0520.03604

0.0530.03705

0.060.0406

0.0690.04307

0.0260.03308

0.050.04409

0.07242493730.05529733610

0.07042893430.055080771811

0.0784060520.065204249212

0.0791986060.057258702913

0.0832010.0644114

Total Margin

Operating Margin

Sheet1

949596979899000102030405060708091011121314

Total Margin4.8%5.6%6.7%6.7%5.8%4.6%4.6%4.2%4.4%4.8%5.2%5.3%6.0%6.9%2.6%5.0%7.2%7.0%7.8%7.9%8.3%

Operating Margin3.4%3.9%4.6%4.0%3.1%2.1%2.0%2.7%3.7%3.3%3.6%3.7%4.0%4.3%3.3%4.4%5.5%5.5%6.5%5.7%6.4%


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Per

cent

age

of R

even

ue

Chart 4.3: Distribution of Outpatient vs. Inpatient Revenues, 1994 2014

Source: Analysis of American Hospital Association Annual Survey data, 2014, for community hospitals.

Gross Inpatient Revenue

Gross Outpatient Revenue

Chart1

0.280.72

0.30.7

0.310.69

0.330.67

0.330.67

0.340.66

0.350.65

0.350.65

0.350.65

0.350.65

0.36025422040.6397457796

0.36996701730.6300329827

0.380.62

0.3840.615

0.390.605

0.410.59

0.420.58

0.43164496850.5683550315

0.440.56

0.450.55

0.460.54

Gross Outpatient Revenue

Gross Inpatient Revenue

Percentage of Revenue

Sheet1

92949596979899000102030405060708091011121314

Gross Outpatient Revenue25%28%30%31%33%33%34%35%35%35%35%36%37%38%38%39%41%42%43%44%45%46%

Gross Inpatient Revenue75%72%70%69%67%67%66%65%65%65%65%64%63%62%62%61%59%58%57%56%55%54%


Chart 4.4: Annual Change in Hospital Operating Revenue and Expenses per Adjusted Admission,(1) 1994 2014

-2%

0%

2%

4%

6%

8%

10%

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Change in Total Expenses Change in Operating Revenue

Source: Analysis of American Hospital Association Annual Survey data, 2014, for community hospitals. (1) An aggregate measure of workload reflecting the number of inpatient admissions, plus an estimate of the volume of outpatient services,

expressed in units equivalent to an inpatient admission in terms of level of effort.

Chart1

0.0160.025

-0.0020.003

0.0020.009

0.0060.001

0.020.01

0.0190.009

0.0250.024

0.0470.054

0.0540.065

0.060.056

0.0470.05

0.0450.047

0.0510.054

0.0450.048

0.04383925120.0333573591

0.02624586630.037484685

0.02670777410.0394336509

0.02124221740.0210081609

0.0653387930.0769052737

0.03834006280.0295608112

0.0310.039

Change in Total Expenses

Change in Operating Revenue

Sheet1

9293949596979899000102030405060708091011121314

Change in Total Expenses8.1%5.8%1.6%-0.2%0.2%0.6%2.0%1.9%2.5%4.7%5.4%6.0%4.7%4.5%5.10%4.5%4.4%2.6%2.7%2.1%6.5%3.8%3.10%

Change in Operating Revenue8.7%5.6%2.5%0.3%0.9%0.1%1.0%0.9%2.4%5.4%6.5%5.6%5.0%4.7%5.40%4.8%3.3%3.7%3.9%2.1%7.7%3.0%3.9%


Medicare, 34.6% Medicare, 38.3% Medicare, 40.2%

Medicaid, 9.6%Medicaid, 12.8%

Medicaid, 17.6%Other Government,

6.1%

Other Government, 1.4%


Private Payer, 41.8% Private Payer, 38.7%Private Payer,(3) 33.1%

Uncompensated Care,(2) 5.1%



Non-patient,(1) 2.7% Non-patient,(1) 2.8% Non-patient,(1) 2.1%

1980 2000 2014

Chart 4.5: Distribution of Hospital Cost by Payer Type, 1980, 2000, and 2014

Source: Analysis of American Hospital Association Annual Survey data, 2014, for community hospitals.(1) Non-patient represents costs for cafeterias, parking lots, gift shops and other non-patient care operating services and

are not attributed to any one payer.(2) Uncompensated care represents bad debt expense and charity care, at cost.(3) Private payer formulas were updated in 2014 to account for the change in bad debt calculations,

which is now reported as a deduction from revenue rather than a expense. (4) Percentages were rounded, so they do not add to 100 percent in all years.

(4) (4) (4)

Chart1

0.34640.09570.06140.41810.0510.0274

0.3830.1280.0140.3870.060.028

0.40222007510.17576247560.01667460840.3314577870.05293278610.0209522679

Medicare

Medicaid

Other Government

Private Payer

Uncompensated Care(2)

Non-patient(1)

Medicaid, 12.8%

Medicaid, 17.6%

Other Government,6.1%



Private Payer, 41.8%

Private Payer, 38.7%

Private Payer,(3) 33.1%




Non-patient,(1) 2.7%



Sheet1

198020002014

Medicare34.6%38.3%40.2%

Medicaid9.6%12.8%17.6%

Other Government6.1%1.4%1.7%

Private Payer41.8%38.7%33.1%

Uncompensated Care(2)5.1%6.0%5.3%

Non-patient(1)2.7%2.8%2.1%


Chart 4.6: Aggregate Hospital Payment-to-cost Ratios for Private Payers, Medicare, and Medicaid, 1994 2014

Source: Analysis of American Hospital Association Annual Survey data, 2014, for community hospitals. (1) Includes Medicaid Disproportionate Share payments.(2) Includes Medicare Disproportionate Share payments.

70%

80%

90%

100%

110%

120%

130%

140%

150%

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Private Payer

Medicaid(1)

Medicare(2)

Chart1

0.9690.9371.244

0.99410.94011.2401

1.02440.94931.2163

1.03650.95971.1749

1.01860.96641.158

0.99950.95651.1511

0.99070.94471.1569

0.98440.9581.1648

0.9790.9611.19

0.9530.9231.223

0.9190.8991.289

0.9230.8711.294

0.9130.8581.303

0.9060.8791.322

0.9090.8871.283

0.9010.891.341

0.92400426450.92816132921.3352167621

0.91362335970.94729374911.3452241687

0.85916437130.88881649621.4885531956

0.87944416060.89814375191.4361059108

0.885480.900461.43657

Medicare

Medicaid(1)

Private Payer

Sheet1

9293949596979899000102030405060708091011121314

Medicare89.0%89.9%96.9%99.4%102.4%103.7%101.9%100.0%99.1%98.4%97.9%95.3%91.9%92.3%91.30%90.60%90.90%90.10%92.40%91.36%85.92%87.94%88.55%

Medicaid(1)89.5%89.6%93.7%94.0%94.9%96.0%96.6%95.7%94.5%95.8%96.1%92.3%89.9%87.1%85.80%87.90%88.70%89.00%92.82%94.73%88.88%89.81%90.05%

Private Payer131.8%130.1%124.4%124.0%121.6%117.5%115.8%115.1%115.7%116.5%119.0%122.3%128.9%129.4%130.30%132.20%128.30%134.10%133.52%134.52%148.86%143.61%143.66%


-$60-$55-$50-$45-$40-$35-$30-$25-$20-$15-$10-$5$0$5

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Billi

ons

Chart 4.7: Hospital Payment Shortfall Relative to Costs for Medicare, Medicaid and Other Government, 1997 2014(1)

Medicare

MedicaidOther Government

Source: Analysis of American Hospital Association Annual Survey data, 2014, for community hospitals. (1) Costs reflect a cap of 1.0 on the cost-to-charge ratio.

Chart1

4.3-1.6-0.7

2.3-1.4-0.6

-0.1-1.9-0.4

-1.4-2.6-0.5

-2.4-2.1-0.7

-3.4-2.3-0.6

-8.1-5-0.5

-15.020740674-7.104942217-0.5333465482

-15.488219078-9.759570839-0.369350714

-18.6-11.321.11

-21.5-10.41.4

-21.9-10.51.2

-25.165715037-11.3310405620.391038581

-20.117165973-7.8242323110.384813384

-23.839257562-6.024064649-0.03

-42.263478706-13.734444838-1.27

-37.865393464-13.167262348-1.45

-37.245554999-14.145872176-1.08

Medicare

Medicaid

Other Government

Billions

Sheet1

979899000102030405060708091011121314

Medicare4.32.3-0.1-1.4-2.4-3.4-8.1-15.0-$15.49-$18.60-$21.50-$21.90-$25.17-$20.12-$23.84-$42.26-$37.87-$37.25

Medicaid-1.6-1.4-1.9-2.6-2.1-2.3-5-7.1-$9.76-$11.32-$10.40-$10.50-$11.33-$7.82-$6.02-$13.73-$13.17-$14.15

Other Government-0.7-0.6-0.4-0.5-0.7-0.6-0.5-0.5-$0.37$1.11$1.40$1.20$0.39$0.38-$0.03-$1.27-$1.45-$1.08


Chart 4.8: Income from Investments and Other Non-operating Gains(1) as a Percentage of Total Net Revenue, 1994 2014

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Per

cent

age

of T

otal

Net

Rev

enue

Source: Analysis of American Hospital Association Annual Survey data, 2014, for community hospitals. (1) Non-operating gains include income from non-operating activities, including investments, endowments and

extraordinary gains, as well as the value of non-realized gains from investments.

Chart1

0.0146443613

0.0181661092

0.0229904813

0.0274555055

0.0275561852

0.0261920223

0.0258294887

0.0158556635

0.0076482891

0.0150078904

0.0165502502

0.0165088665

0.0207342186

0.0271417164

-0.0069192292

0.006469662

0.0181301504

0.0162428301

0.0141222671

0.0232724536

0.0200844727

Ratios

Percentage of Total Net Revenue

Sheet1

9293949596979899000102030405060708091011121314

Ratios1.9%1.8%1.5%1.8%2.3%2.7%2.8%2.6%2.6%1.6%0.8%1.5%1.7%1.7%2.1%2.7%-0.7%0.6%1.8%1.6%1.4%2.3%2.0%


Chart 4.9: Number of Bond Rating Upgrades and Downgrades, Not-for-profit Health Care, 1995 2015

Source: Email correspondence with Moodys Investors Services.

-70

-50

-30

-10

10

30

50

70

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Upgrades

Downgrades


Chart 4.10: Median Average Age of Plant, 1994 2014

8.6 8.8 8.99.2 9.3 9.2 9.4

9.7 9.8 9.8 9.8 9.9 9.8 9.8 9.6 9.810.110.310.1 10.2

10.9

0

2

4

6

8

10

12

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Year

s

Source: Optum, Almanac of Hospital Financial and Operating Indicators, 2005, 2008, 2009, 2010, 2011, 2013, 2014, 2015 and 2016 and CHIPS, The Almanac of Hospital and Financial Operating Indicators, 1994 and 1996-7.

Chart1

8.6

8.8

8.9

9.2

9.3

9.2

9.4

9.67

9.76

9.83

9.83

9.9

9.78

9.8

9.56

9.75

10.1

10.32

10.14

10.17

10.91

Age

Years

8.8

Sheet1

949596979899000102030405060708091011121314

Age8.68.88.99.29.39.29.49.79.89.89.89.99.89.89.69.810.110.310.110.210.9


Chart 4.11: Percent Change in Employment Cost Index,(1) All Private Service Industries, All Health Services and Hospitals, 2006 2015(2)

Source: Bureau of Labor Statistics, Employment Cost Index, 12 months ending December 2015. Link: www.bls.gov.(1) Total compensation.(2) Data represent annualized 12 month percent change.

0%

1%

2%

3%

4%

5%

06 07 08 09 10 11 12 13 14 15

All Private Service Industries

Hospitals All Health Services

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