Report: Nonprofit hospitals rely on financial reserves to continue their mission

Financial reserves play an important role for not-for-profit hospitals and health systems in ensuring that they can continue to serve their communities in the face of challenging operational and financial headwinds, according to a new report prepared for the AHA by Kaufman Hall. The report explains how financial reserves enable struggling not-for-profit hospitals and health systems to make needed investments, borrow at affordable interest rates, cover operating expenses and remain available to their communities as surging labor and supply costs, investment losses and other challenges persist.  
  
“The importance of financial reserves was demonstrated over the course of 2022, when year-to-date median operating margins for not-for-profit hospitals and health systems remained in negative territory throughout the year,” the report notes. “This means that more than half of the hospitals providing data for Kaufman Hall’s monthly National Hospital Flash Report ended the year with negative operating margins, and have not seen an improvement as they move into 2023. Net losses in 2022 for some of the nation’s largest not-for-profit health systems were well above $1 billion and in some cases approached $2 billion.”  
  
Fierce Healthcare today published a commentary by Ashley Thompson, AHA senior vice president for public policy analysis and development, and Lisa Goldstein, senior vice president at Kaufman Hall, discussing elements of the report.