TRENDWATCH CHARTBOOK 2018
Trends in Hospital Financing
Chart 4.1: Percentage of Hospitals with Negative Total and Operating Margins, 1995 – 2016
Source: Analysis of American Hospital Association Annual Survey data, 2016, 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.
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 15 16
Negative Operating Margin
Negative Total Margin
TRENDWATCH CHARTBOOK 2018
Trends in Hospital Financing
Chart 4.2: Aggregate Total Hospital Margins(1) and Operating Margins,(2)
1995 – 2016
Total Margin
Operating Margin
0%
2%
4%
6%
8%
10%
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Source: Analysis of American Hospital Association Annual Survey data, 2016, 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.
TRENDWATCH CHARTBOOK 2018
Trends in Hospital Financing
Chart 4.3: Distribution of Outpatient vs. Inpatient Revenues, 1995 – 2016
Source: Analysis of American Hospital Association Annual Survey data, 2016, for community hospitals.
Gross Inpatient
Revenue
Gross Outpatient
Revenue
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
TRENDWATCH CHARTBOOK 2018
Trends in Hospital Financing
Chart 4.4: Annual Change in Hospital Operating Revenue and Expenses per Adjusted Admission,(1) 1995 – 2016
-2%
0%
2%
4%
6%
8%
10%
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Change in Total Expenses
Change in Operating Revenue
Source: Analysis of American Hospital Association Annual Survey data, 2016, 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.
TRENDWATCH CHARTBOOK 2018
Source: Analysis of American Hospital Association Annual Survey data, 2016, 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.
Trends in Hospital Financing
Chart 4.5: Distribution of Hospital Cost by Payer Type, 1980, 2000, and 2016
(4) (4) (4)
Medicare, 34.6% Medicare, 38.3% Medicare, 40.8%
Medicaid, 9.6%Medicaid, 12.8%
Medicaid, 18.5%Other Government,6.1%
Other Government, 1.4%
Other Government, 1.5%
Private Payer, 41.8% Private Payer, 38.7%
Private Payer,(3) 33.4%
Uncompensated Care,(2) 5.1%
Uncompensated Care,(2) 6.0%
Uncompensated Care,(2) 4.2%
Non-patient,(1) 2.7% Non-patient,(1) 2.8% Non-patient,(1) 2.1%
1980 2000 2016
TRENDWATCH CHARTBOOK 2018
Trends in Hospital Financing
Chart 4.6: Aggregate Hospital Payment-to-Cost Ratios for Private Payers, Medicare, and Medicaid, 1995 – 2016
Source: Analysis of American Hospital Association Annual Survey data, 2016, for community hospitals. (1) Includes Medicaid Disproportionate Share Hospital payments.(2) Includes Medicare Disproportionate Share Hospital payments.
70%
80%
90%
100%
110%
120%
130%
140%
150%
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Private Payer
Medicaid(1)
Medicare(2)
TRENDWATCH CHARTBOOK 2018
Trends in Hospital Financing
-$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 15 16
Bill
ions
Chart 4.7: Hospital Payment Shortfall Relative to Costs for Medicare, Medicaid and Other Government, 1997 – 2016(1)
Medicare
Medicaid
Other Government
Source: Analysis of American Hospital Association Annual Survey data, 2016, for community hospitals. (1) Costs reflect a cap of 1.0 on the cost-to-charge ratio.
TRENDWATCH CHARTBOOK 2018
Trends in Hospital Financing
Chart 4.8: Income from Investments and Other Non-Operating Gains(1) as a Percentage of Total Net Revenue, 1995 – 2016
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Perc
enta
ge o
f T
ota
l N
et
Revenue
Source: Analysis of American Hospital Association Annual Survey data, 2016, 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.
TRENDWATCH CHARTBOOK 2018
Trends in Hospital Financing
Chart 4.9: Number of Bond Rating Upgrades and Downgrades, Not-for-profit Health Care, 1997 – 2017
Source: Email correspondence with Fitch Ratings, Inc.
-50
-30
-10
10
30
50
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Upgrades
Downgrades
TRENDWATCH CHARTBOOK 2018
Trends in Hospital Financing
Chart 4.10: Median Average Age of Plant, 1995 – 2015
8.8 8.89.2 9.3 9.2 9.4 9.7 9.8 9.8 9.8 9.9 9.8 9.8 9.6 9.8
10.1 10.3 10.1 10.2
10.911.5
0
2
4
6
8
10
12
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Years
Source: Optum, Almanac of Hospital Financial and Operating Indicators, 2005, 2008, 2009, 2010, 2011, 2013, 2014, 2015, 2016, and
2017; CHIPS, The Almanac of Hospital and Financial Operating Indicators, 1994 and 1996-7.
TRENDWATCH CHARTBOOK 2018
Trends in Hospital Financing
Chart 4.11: Percent Change in Employment Cost Index,(1) All Private Service Industries, All Health Services and Hospitals, 2005 – 2017(2)
Source: Bureau of Labor Statistics, Employment Cost Index, 12 months ending December 2017. Link: www.bls.gov.(1) Total compensation.(2) Data represent annualized 12 month percent change.
0%
1%
2%
3%
4%
5%
05 06 07 08 09 10 11 12 13 14 15 16 17
All Private Service
Industries
Hospitals
All Health Services