US Health System Cash Reserves Plummet
By Laura Dyrda of Becker Hospital Review
Cash reserves, an important indicator of financial stability, are dropping for hospitals and health systems across the U.S.
Both large and small health systems are affected by rising labor and supply costs while reimbursement remains low. St. Louis-based Ascension reported days cash on hand dropped from 336 at the end of the 2021 fiscal year to 259 as of June 30, 2022, the end of the fiscal year. The system also reported accounts receivable increased three days from 47.3 in 2021 to 50.3 in 2022 because commercial payers were slow, especially in large dollar claims.
Trinity Health, based in Livonia, Mich., also reported days cash on hand dropped to 211 in fiscal year 2022, ending June 30, compared to 254 days at the end of 2021. Trinity attributed the 43-day decrease in cash on hand to “investment losses and the recoupment of the majority of the Medicare cash advances.”
Chicago-based CommonSpirit Health reported days cash on hand decreased by 69 days in the last year. The 140-hospital health system reported 245 days cash on hand at the 2021 fiscal year’s end June 30, and 176 days for 2022.
Lehigh Valley Health Network in Allentown, Pa., said unfavorable trends in the capital market led to investment losses and a drop in days cash on hand from 216 to 150 days in the 2022 fiscal year ending June 30. The health system also had a scheduled repayment of $191.1 million in advance Medicare dollars as well as $25 million in deferred payroll tax payments.
Philadelphia-based Thomas Jefferson University reported cash on hand for clinical operations dropped by 10.9 days in just the last quarter due to nonoperating investment losses and repaying government advances, which equaled about five days cash on hand. The health system reported 158.5 days cash on hand as of Sept. 30.
While the large health systems’ days cash on hand are dropping, they still have deep reserves. Smaller hospitals and health systems are in a more dire situation. Doylestown (Pa.) Hospital reported as of Sept. 30 the system had 81 days cash on hand, and Moody’s downgraded the hospital in June after the days cash on hand dropped below 100.
Kaweah Health in Visalia, Calif., saw reserves plummet since the pandemic began from 130 to 84 days cash on hand. Gary Herbst, CEO of Kaweah Health, blamed lost elective procedures, high labor costs, inflation and more for the system’s financial issues.
“The COVID-19 pandemic, and its aftermath, have brought District hospitals to the brink of financial collapse,” Mr. Herbst wrote in an open letter to Gov. Gavin Newsom published in the Visalia Times Delta. He asked Mr. Newsom to provide additional funding for public district hospitals. “Without your help, it will soon be virtually impossible for Medi-Cal patients to receive anything but emergency medical care in the State of California.”
Mon, 11/14/2022 – 20:35