9% of hospitals had ‘vulnerable’ cash on hand levels in 2022

While 73% of nonprofit hospitals and health systems saw “strong” levels of cash on hand in 2022, 18% saw “adequate” levels, with 9% coming in at “vulnerable” or “highly vulnerable” with available cash on hand, according to a Jan. 9 KFF report.

The analysis looked at “days cash on hand” at 274 nonprofit hospitals and health systems rated by S&P Global. It also found the average level of days cash on hand was 218 across all hospitals and health systems analyzed, which was similar to 2019 levels but down from COVID-19 pandemic levels.

Below are five additional nonprofit hospitals and health systems findings from the analysis:

– Of the nonprofit hospitals and health systems with negative operating margins, 60% saw at least “strong” levels of days cash on hand in 2022.

–  Of those with “vulnerable” or “highly vulnerable” days of cash on hand, 81% had negative operating margins in 2022.

– Total financial reserves and daily cash expenses grew from 23% in 2019 to 27% in 2022.

– Financial reserves fell by $64 billion in 2022 across the board. The market value of their stocks and additional financial investments went down by $70 billion. Financial investment values likely stabilized or increased during 2023 for nonprofit hospitals and health systems due to market improvement.

– Financial reserves increased earlier in the pandemic, from $446 billion in 2019 to $548 billion in 2022, a $102 billion change among nonprofit hospitals and health systems, part of which may be attributed to pandemic relief funds.