Chart 4.1: Percentage of Hospitals with Negative Total and Operating Margins, 1995 – 2011

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

Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2011, for community hospitals.

Negative Operating Margin

Negative Total Margin

Chart 4.2: Aggregate Total Hospital Margins,(1) Operating Margins(2) and Patient Margins,(3) 1991 – 2011

Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2011, 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.(3) Patient Margin is calculated as the difference between net patient revenue and total expenses divided

by net patient revenue.

Total Margin

Operating Margin

Patient Margin

-6%

-4%

-2%

0%

2%

4%

6%

8%

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

Per

cent

age

of R

even

ueChart 4.3: Distribution of Outpatient vs. Inpatient Revenues, 1991 – 2011

Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2011, for community hospitals.

Gross Inpatient Revenue

Gross Outpatient Revenue

Chart 4.4: Annual Change in Hospital Operating Revenue and Expenses per Adjusted Admission,(1) 1991 – 2011

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

Change in Total Expenses Change in Operating Revenue

Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2011, 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.

Medicare, 34.6% Medicare, 38.3% Medicare, 39.3%

Medicaid, 9.6%Medicaid, 12.8% Medicaid, 16.3%

Other Government,6.1%

Other Government, 1.4%

Other Government, 1.8%

Private Payer, 41.8% Private Payer, 38.7%Private Payer, 34.6%

Uncompensated Care,(2) 5.1%

Uncompensated Care,(2) 6.0%

Uncompensated Care,(2) 5.9%

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

1980 2000 2011

Chart 4.5: Distribution of Hospital Cost by Payer Type, 1980, 2000, and 2011

Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2011, 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.

Chart 4.6: Aggregate Hospital Payment-to-cost Ratios for Private Payers, Medicare and Medicaid, 1991 – 2011

Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2011, for community hospitals. (1) Includes Medicare Disproportionate Share payments.(2) Includes Medicaid Disproportionate Share payments.

Medicare(1)

Medicaid(2)

Private Payer

70%

80%

90%

100%

110%

120%

130%

140%

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

-$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

Billi

ons

Chart 4.7: Hospital Payment Shortfall Relative to Costs for Medicare, Medicaid and Other Government, 1997 – 2011(1)

Medicare

Medicaid

Other Government

Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2011, for community hospitals. (1) Costs reflect a cap of 1.0 on the cost-to-charge ratio.

Chart 4.8: Income from Investments and Other Non-operating Gains(1) as a Percentage of Total Net Revenue, 1991 – 2011

-0.8%

0.0%

0.8%

1.6%

2.4%

3.2%

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

Per

cent

age

of T

otal

Net

Rev

enue

Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2011, 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.

Chart 4.9: Number of Bond Rating Upgrades and Downgrades, Not-for-profit Health Care, 1994 – 2012

Source: Moody’s Investors Services. Moody's: 2012 Not-for-Profit Healthcare Sets New Record in Downgraded Debt. February 12, 2013.

Upgrades

Downgrades

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

10

30

50

70

70

50

30

10

Chart 4.10: Median Average Age of Plant, 1991 – 2011

8 8.0 8.4 8.6 8.8 8.9 9.2 9.3 9.2 9.4 9.7 9.8 9.8 9.8 9.9 9.8 9.8 9.6 9.8 9.9 10.3

0

2

4

6

8

10

12

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

Yea

rs

Source: Optum/Ingenix, Almanac of Hospital Financial and Operating Indicators, 2005, 2008, 2009, 2010, 2011, and 2012 and CHIPS, The Almanac of Hospital and Financial Operating Indicators, 1994 and 1996-7.

Chart 4.11: Percent Change in Employment Cost Index(1), All Private Service Industries, All Health Services and Hospitals, 2003 – 2012(2)

2.7%2.9%

3.1%

2%

3%

4%

All Private Service Industries All Health Services Hospitals

Source: Bureau of Labor Statistics, Employment Cost Index, 12 months ending December 2012. Link: www.bls.gov.(1) Total compensation.(2) Data represent ten-year average.