AHA: Hospitals still face financial challenges

Hospitals took a hit in 2008 and are still struggling now, a new report from the American Hospital Association concludes.

Hospitals have also struggled to maintain adequate margins during the past 18 months. During 2008, aggregate total margins for community hospitals fell to about 2.5 percent, hitting the lowest level in more than 25 years, the group reported. This was driven, in part by a dramatic climb in the volume of uncompensated care, which jumped from 24 percent to 45 percent for low-income populations for the period ending June 2009 versus the same period the year before.

Access to capital is still constrained, too. By the end of 2008, nine out of 10 hospitals had little or no access to capital. What's more, nearly half of all facilities surveyed were delaying capital projects, and some had stopped projects that already were in progress, the AHA says. Things haven't improved much during the first six months of 2009, either, researchers note.

Given these pressures, with days cash on hand and debt service coverage ratios dropping, hospitals' credit ratings dropped, as well. In fact, one in 10 hospitals was in technical default on a bond covenant between September of 2008 and August of 2009, the group said.

To get data on trends:
- read the AHA report (.pdf)

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