Author: Freddie Sanchez

Modern Healthcare

The Trump administration on Sunday sent a letter to hospitals Sunday “requesting” that they report their COVID-19 testing data to HHS on a daily basis.

“We understand you may be reporting to your state, but the data is needed at the federal level to support FEMA and the Centers for Disease Control and Prevention in their efforts to support states and localities in addressing and responding to the virus,” Vice President Mike Pence wrote.

The request primarily applies to hospitals with in-house labs. “Academic, university and hospital ‘in-house’ labs are performing thousands of COVID-19 tests each day, but unlike private laboratories, the full results are not shared with government agencies working to track and analyze the virus,” Pence wrote.

Test results are due to HHS every day at 5 p.m. ET. Hospitals are already being asked to share their daily bed counts with the government.

The American Clinical Laboratory Association, which represents clinical and anatomic pathology laboratories, has been asking for federal support in the various stimulus packages to aid with the demand on their facilities.

“One month ago today, the U.S. Food and Drug Administration cleared the regulatory barriers preventing commercial labs from performing COVID-19 testing. Since then, ACLA member laboratories have steadily increased COVID-19 testing capacity each week. In total, ACLA members have performed approximately 650,000 COVID-19 tests to date, including 84,000 tests completed just yesterday. We currently have six ACLA members testing for COVID-19, and other members are working to bring additional tests online,” said ACLA President Julie Khani.

Rachel Cohrs

Senate leadership and Trump administration officials announced early Wednesday morning that they reached an agreement on a $2 trillion COVID-19 economic stimulus deal that includes billions of dollars to bolster the healthcare system.

“There is much more money for our hospitals, for our nurses and physicians, for our nursing homes, for our community health centers to do the job they need to do—over $130 billion,” Senate Minority Leader Chuck Schumer (D-N.Y.) said.

Lawmakers put $100 billion in a fund to reimburse providers for COVID-19 related expenses and lost revenue. Providers had sounded the alarm that they needed funding to support operations, expand surge capacity and buy protective equipment in this package.

The American Hospital Association, American Nurses Association and American Medical Association had asked for $100 billion to support operations, while the Federation of American Hospitals had asked for $225 billion. Their efforts were largely successful, as the first draft of Senate Republicans’ legislation did not include any such emergency fund, and a later draft included $75 billion.

Congress also set aside $16 billion for buying medical supplies for the Strategic National Stockpile and $1 billion for purchases under the Defense Production Act, which the Trump administration has resisted using so far despite the calls of hospitals, doctors and governors.

The legislation would suspend the Medicare sequester to boost provider payments. The sequester, which reduced spending for most benefits by 2% starting in 2013, would be suspended from May 1 to December 31, 2020. However, the sequestration would be extended an additional year past its original end date. The suspension was a top priority for hospital and physician groups.

Hospitals would also get a 20% add-on payment for inpatient care for COVID-19 patients.

The deal would extend Medicare and Medicaid programs that were set to expire on May 22 until Nov. 30, setting up a potential vehicle for legislation to ban surprise medical bills and address prescription drug prices after the 2020 election.

Cuts to Medicaid disproportionate-share hospital payments would be delayed through November, though hospitals had aimed for a two-year delay.

Community health centers would get $1.3 billion in emergency funding, but their main funding stream was only extended until Nov. 30. The National Association of Community Health Centers had asked for at least a two-year extension of federal funding.

The bill would also allow more hospitals, including critical access hospitals, to request advance Medicare payments based on prior years’ payments and pay them back over at least 12 months. Premier, which pushed for the change, said the upfront payments could help with hospitals’ cash-flow issues as elective surgeries are delayed.

Other funding provisions would funnel $14 billion to pay medical expenses at the Department of Veterans Affairs, $250 million for increasing hospitals’ surge capacity, $200 million to the Federal Communications Commission to support telehealth efforts, and $45 billion to the Federal Emergency Management Administration.

The bill would require the HHS secretary to develop and implement a new payment rule for federally qualified health centers and rural health clinics that provide telehealth services to eligible patients. Payment rates would be based on payment that currently applies to comparable telehealth services under the physician fee schedule. HHS would also have to issue guidance on using telehealth for home health services.

The package also mandates more reporting requirements about where drugmakers source their materials and allows the FDA to prioritize drug applications that could help address a shortage.

FDA policy would be amended so that laboratory developed tests and diagnostic kits could be used, and covered by private insurance plans, before receiving an emergency use authorization.

Insurers would be required to pay either a negotiated price with a provider or a cash price posted by the provider for the test. Vaccines that meet certain effectiveness standards would also have to be covered with no cost-sharing.

The Senate is expected to vote to pass the measure Wednesday, Senate Majority Leader Mitch McConnell (R-Ky.) said. House Speaker Nancy Pelosi (D-Calif.) said House Democrats are still reviewing the bill, and they are not expected to vote on Wednesday.

Bloomberg L.P.

Royal Philips NV is ramping up production of ventilators to double output within the next eight weeks and is targeting a four-fold increase by the third quarter to meet demand from hospitals overwhelmed by patients suffering from the coronavirus.

The most-needed products are vital signs monitors, portable ventilators and medical equipment to treat a range of respiratory conditions, the Dutch company said in a statement late Sunday.

It’s hiring more employees, adding lines and increasing shifts to ensure manufacturing continues around the clock.

The health-tech company sees a demand much larger than capacity, even though it sees a negative impact on overall results through the year’s first half.

With countries in desperate need for ventilators, it’s making choices: It favors places that have demand because hospitals are confronted with many coronavirus patients — so-called category 3 and 4 regions — over countries that are proactively building up stock in case Covid-19 escalates there, Chief Executive Officer Frans van Houten said in a phone interview.

It first delivered to China, then Italy, and now Switzerland, France, Spain, New York, meanwhile increasing production generally “to try to keep pace with the development of the outbreak.”

Germany called for help from its car makers, like Volkswagen AG, which had shut down factories to shift production to ventilators and masks. Ferrari NV and Fiat Chrysler Automobiles NV are in talks with Italy’s biggest ventilator manufacturer to help boost its output.

Also Philips’s rival Medtronic Plc might have found common cause with a car maker. Elton Musk, head of Tesla Inc., who initially downplayed the risks posed by the virus, tweeted Saturday that he had talked with the Dublin-based manufacturer about making ventilators.

Van Houten stressed it might be most productive to work with companies that already have experience with medical equipment and their supply chains. The issue of the machines’ components is crucial.

In some countries there is an issue of labor: Many factories are shut, with countries in lock-down, employees ordered to stay home and transport halted.

“All governments currently want to have their own factory, which is almost impossible,” he said. “Even if you have a production line, you are still a long way off; it is all about getting all those components on time. That is why we also call for governments to give room to all those suppliers to produce.”

The Dutch company, for example, had to step in to help a small supplier in the Philippines, which is in full lock-down, to obtain government approval to make a sensor Philips needs for its ventilator. It’s one of the hundreds of suppliers which all need to supply components for the firm’s medical equipment.

He stressed that car makers were not the only option.

“We will look at all proposals,” Van Houten said. “But we ourselves think that we can greatly expand our own production lines, and we are also working with so-called contract manufacturers, because they are specialized in doing production for others.”

“They can get those components more easily,” he said. “I think that’s more likely to succeed than firms that have never made a medical device.”

Philips manufactures globally with final assembly sites in North America, Europe and Asia and a network of certified materials and component suppliers. Its factories in China are running above 80% capacity again, it recently said.

Still, the Amsterdam-based company sees a negative impact from the virus in the first half as the outbreak has cut demand for Philips’ consumer goods and hampered global supply chains. The company repeated it can’t quantify the magnitude and duration of the impact.

(Updates with CEO comments from third paragraph)

For more articles like this, please visit us at bloomberg.com

©2020 Bloomberg L.P.

Stephen Ross Johnson

The country’s home healthcare providers are preparing to see a rise in demand for their services as more elderly patients and those with underlying health conditions stay home to lessen their risk of exposure to COVID-19.

But they see challenges in making sure providers remain healthy—both physically and financially—especially as they compete against hospitals for limited resources.

“Acquiring the protective equipment is becoming problematic,” said William Dombi, president of the National Association for Home Care & Hospice, a leading trade group representing home care and hospice organizations. “At the moment, home healthcare providers’ access to supplies is minimal at best.”

Like hospitals, Dombi said many home health companies are turning to state and local health departments for help in accessing the National Strategic Stockpile for personal protective equipment like N95 respirator masks, gowns and glove. Supplies from the federal stockpile go to states and are then allocated to local health departments, which decide how they are distributed.

Federal health officials have already warned there is not enough equipment within the stockpile to address the current outbreak. HHS has estimated the stockpile had about 40 million N95 masks, or about 1%, of the amount medical professionals would need for a full-blown pandemic.

Stephan Rodgers, CEO of Dallas-based supportive healthcare provider AccentCare, said the challenge in procuring protective equipment has been mitigated in the short term through their emergency planning, which he said began six weeks ago and included a systemwide inventory of supplies and a new system to move equipment to where there was demand.

Rodgers projected the company had enough supplies on hand for the next three months, with plans to acquire additional equipment through non-traditional sources such as suppliers for industrial and waste management companies.

AccentCare also requires that all caregivers take their temperature daily and developed a protocol for personnel to check in with patients over the phone prior to a visit to make sure they are not experiencing symptoms related to COVID-19.

Early in its preparation AccentCare launched an education campaign to train all 25,000 of their care professionals to identify symptoms for COVID-19, and properly wash their hands and use personal protective equipment.

Rodgers said the company plans to also expand its telehealth services. Rodgers wants to have 30% of AccentCare’s 25,000 home health patients turn to telehealth. Currently only about 1,500 use the service. He said as the number of coronavirus cases rise, the need to keep caregivers safe will require a greater reliance on such digital tools.

“We’re probably not going to get reimbursed for all this telehealth we’re going to put out there, but it’s the right thing to do,” Rodgers said.

This week the Trump administration announced it will temporarily expand telehealth services under Medicare to cover such interactions at the same rate as in-person visits and allow doctors to provide services with their personal phones.

But stakeholders say neither the CMS changes, the $50 billion in federal disaster relief funding available through Trump’s emergency declaration, nor the proposed Families First Coronavirus Response Act passed by the Senate on Wednesday allows for home healthcare providers to expand their telehealth services.

While Medicare covers the cost of home health agencies providing remote patient monitoring if it is used to, “augment the care planning process”, the program does not reimburse home health providers that use telehealth services to substitute for in-person visits.

“If this [COVID-19 outbreak] becomes widespread, we’re going to need to do home visits using telemedicine,” said Paul Kusserow, president and CEO of home health giant Amedisys. “We’re going to need to supplement our home visits with telemedicine visits and those are going to need to be counted.”

Kusserow would also like to see the CMS create greater flexibility around what’s known as the “homebound requirement.” The program only covers home health services if a patient is homebound, which the CMS defines as being unable to leave your home without assistance from another person or a wheelchair. Kusserow said current rules would prohibit home healthcare providers from treating the majority of people who contract COVID-19.

Like AccentCare, Kusserow said Amedisys centralized its inventory to keep better track of its supplies and has conducted additional employee training on caring for COVID-19 patients.

While he felt confident the company has done what it can to prepare itself for an outbreak of coronavirus cases, Kusserow said CMS will ultimately need to make changes to its home healthcare rules to allow providers to be a viable care alternative if hospitals become overwhelmed with cases.

“If hospital beds are full, I think the idea has to be that people are going to be sent home,” Kusserow said. “We think ultimately we’ll be in a very good spot to respond to this, but we need more arrows in our quiver and more flexibility to be able to appropriately do this if they really want people taking care of in the home.”

https://www.modernhealthcare.com/home-health/home-healthcare-looks-step-care-covid-19-patients?utm_source=modern-healthcare-covid-19-coverage&utm_medium=email&utm_campaign=20200318&utm_content=article2-headline

Gary Rhodes for The Texas Tribune

A surgical
suite at Eastland Memorial Hospital in North Texas on March 10, 2019. Gary
Rhodes for The Texas Tribune

The front
lines of Texas’ health care workforce are preparing for the possibility of
widespread COVID-19 infection — and sounding the alarm about the state’s
limited number of hospital beds.

Some
hospitals are restricting who may visit and screening outsiders for fever. Some
are asking doctors and nurses to work longer hours. Others are building
drive-through testing sites, temporary triage centers and fever clinics in
anticipation of high patient volumes.

And all of
them are urging Texans to stay as isolated as possible in order to slow the
spread of the new coronavirus, because there aren’t enough hospital beds to
care for critical patients if too many people get sick at once.

“If we can
get people to stay out of crowds, stay out of crowded environments to slow down
the transmission of this virus from person to person, we should be able to
stretch our resources to the point where we can take care of the entire
population that needs hospitalized care,” said Craig Rhyne, the Lubbock-based
regional chief medical officer for Covenant Health.

The Texas
Tribune interviewed more than a dozen doctors, nurses and other health care
workers about how ready the state’s health care system is for an expected spike
in coronavirus cases. Most spoke on the condition of anonymity because their
employers did not allow them to talk to reporters.

Because
COVID-19 is a respiratory disease that attacks the lungs, some doctors worried
that they would run short on ventilators, machines that provide oxygen to
patients who become so sick they cannot breathe on their own.

“Capacity is
a big problem if this thing continues to continue to prove to be a nasty bug,”
said one emergency room doctor who works at multiple suburban and rural
hospitals in North Texas. “The doomsday scenario that we’re worrying about is
what does a relatively small hospital do when we’re using all four or five of
our ventilators.”

Texas’
hospital capacity — the number of beds available per person in the general
population — is about 2.9 beds per 1,000 Texans, according to state regulators.
The U.S. rate is about 2.8 beds per 1,000 people.

That’s less
than the capacity of other countries that have already seen widespread
transmission of coronavirus. Italy, where more than 2,100 people have died from
COVID-19 and the nation’s hospital system has been overwhelmed, has 3.2 beds
per 1,000 people, according to the Organization for Economic Cooperation and
Development. European media reported that Italian doctors were
prioritizing ventilators for the patients considered most likely to survive,
while the country ordered manufacturers to ramp up ventilator production.

South Korea,
where the government has aggressively tested its population for the virus and
the number of new infections has leveled off, has more than 12 hospital beds
per 1,000 people — roughly four times more than Texas. The country reported 75
deaths from COVID-19 as of Monday and has seen the daily rate of new
cases fall from more than 900 in late
February to less than 100 this week.

Texas health
care workers say those figures underscore the need to slow the number of new
infections so that hospitals can keep up.

“We need to
do the best we can to try to slow down the virus so that our hospital systems
are not overwhelmed,” said Mary Dale Peterson, president of the American
Society of Anesthesiologists and chief operating officer of the Driscoll Health
System in Corpus Christi.

Other health
care workers expressed fears that supplies of personal protective equipment,
such as N95 respirator masks, could quickly run
out.

Allen was
able to place a limited order for masks last week, he said, but a backlog of
orders kept the manufacturer from fulfilling the complete request. He estimated
his clinic had enough protective equipment to last roughly three months under
normal conditions and said he had been told to reuse masks as long as the
patients they came into contact with hadn’t tested positive for
COVID-19.

“Literally, my boss,told me to hide them,” said Allen, an X-ray technician at a Central Texas clinic who keeps the masks under lock and key. Many patients he sees get X-rays to check for pneumonia or other respiratory conditions.

“I’ve heard
from some of our members that they’re struggling just to get the disposable
surgical gowns that they would use in the operating room and are having to
resort back to cloth gowns that they would have to launder and sterilize,” said
Serena Bumpus, director of practice for the Texas Nurses Association.

In the eyes
of Peter Hotez, the ability to protect health care workers from becoming sick
is “our weakest link right now in our U.S. response to COVID-19.”

Hotez, dean
of the National School of Tropical Medicine at Baylor College of Medicine, told
CNN this week that keeping workers safe will be paramount in ensuring the
health care system can handle an influx of sick patients.

“If we have
multiple frontline health care workers, ER physicians, nurses go down in this
epidemic, a situation where we have colleagues taking care of colleagues in the
intensive care unit, there’s nothing more destabilizing for the United States
and we have to make this our highest priority,” he said.

Two
emergency room doctors were reported to be in critical condition this week from
coronavirus infection, one in New Jersey and the other in Washington. And on
Monday, the U.S. Centers for Disease Control and Prevention announced one of
its employees had tested positive for COVID-19.

Texas reported its first
coronavirus-related death, a Matagorda County man in his late 90s, late Monday.

For
Peterson, the Corpus Christi anesthesiologist, a main concern is the lack of
testing, which can limit hospitals’ ability to perform effective triage, or
sorting of patients based on how immediately they need care.

One nurse at
MD Anderson Cancer Center in Houston said the hospital had begun building a
temporary structure in an ambulance bay to serve as a triage space. Brette
Peyton, a hospital spokesperson, said it was one of “numerous proactive
measures aimed at minimizing risk to our particularly vulnerable patient
population.”

And
Jacqueline, a nurse at Parkland Health and Hospital System in Dallas, said her
hospital was assigning some nurses to solely focus on patients who had tested
positive for coronavirus.

“In my years
of experience in nursing that’s absolutely unheard of because we just don’t
have the staff for that,” she said. “I’m grateful, though, because that’s
really what needs to be done.”

Other nurses
were being asked to prepare healthier patients to be discharged more quickly,
she said, “because they don’t want them exposed to anything in the hospital and
because we may need that bed.”

A Parkland spokesperson did not respond to
emailed questions.

Piedmont Healthcare executives, supply chain experts and clinicians huddled the night of Jan. 12 to mitigate one of the biggest supply chain disruptions the health system has encountered.

They had just gotten word that their primary supplier of surgical gowns, Cardinal Health, distributed potentially contaminated products. Around half of Atlanta-based Piedmont’s 11 hospitals were affected.

It sequestered the affected gowns as well as other supplies that Cardinal packaged them with. But the health system did not have to cancel any surgeries as it worked with Cardinal and other stakeholders to source alternatives.

“Not of this scale, but supply disruptions have been occurring for years,” said Joe Colonna, Piedmont’s vice president of supply chain. “The secret is having a good relationship with clinical folks and leadership—no one panicked.”

How the recall unfolded

Sept. 1, 2018 – Jan. 10, 2020: Gowns shipped to hospitals

Dec. 10, 2019: Cardinal receives a tip that Siyang HolyMed, one of its manufacturers in China, used two unauthorized sites to produce the gowns

Dec. 20, 2019: Cardinal confirms the tip in an on-site inspection; stops doing business with Siyang and halts exports

Jan. 7, 2020: Cardinal places a hold on several SKUs

Jan. 10, 2020: Unable to identify specific gowns from the unauthorized plants, Cardinal puts a hold on all lots from Siyang and notifies the Food and Drug Administration

Jan. 21, 2020: Cardinal issues recall notice

Cardinal said that 2,807 facilities around the world received gowns that may have been contaminated at a manufacturing plant in China. The wholesale distribution giant recalled 9.1 million gowns, 7.7 million of which were distributed to hospitals, ambulatory surgery centers and labs from Sept. 1, 2018, to Jan. 10, 2020, Cardinal estimated in a Jan. 21 notice that warned of possible surgical-site infections. Executives said they sincerely apologize and that patient safety is their top concern.

As more manufacturing occurs overseas, these issues will likely persist. It’s difficult to ascertain where first-line suppliers get their materials, said Dr. Marcus Schabacker, CEO of the ECRI Institute. Things get cloudier as the supply chain adds links.

Piedmont is creating a long-term mitigation strategy in case manufacturers can’t sustain higher production levels. In the meantime, it aims to develop a more strategic, and less transactional, relationship with suppliers. The goal is to shed some light on where materials are sourced and how products are made to identify vulnerabilities, Colonna said.

ECRI hasn’t heard of critical shortages or a delay of lifesaving procedures as a result of the recall, so the initial supply chain disruption seems to have been mitigated, Schabacker said.

“But can it happen tomorrow with a different product? Totally,” he said. “Hopefully stakeholders take this as a red flag.”

Cardinal and the Food and Drug Administration said they were not aware of any cases of patient harm at this time. But pinpointing the source of an infection can be tricky, Schabacker said.

“We don’t know if it really started in September or before,” he said. “There is clearly a potential for it to be widespread.”

Cardinal received a tip on Dec. 10, 2019, that one of its manufacturers, Siyang HolyMed in China, was using two unauthorized sites to produce AAMI Level 3 surgical gowns, which are used for procedures like open-heart surgery and knee replacements. The company confirmed the tip during an on-site investigation on Dec. 20, and immediately stopped doing business with Siyang and halted imports.

The gowns had increased bioburden levels, which identifies and quantifies bacteria before sterilization, but the exact amounts are unknown. The windows at the inspected site were open, it lacked appropriate hand-washing stations, food was in the manufacturing area and the door wasn’t secure, the company said.

The gowns are shipped to sterilization sites after they are made. But Cardinal cannot ensure the products are sterile because of their unquantified exposure to bacteria while they were made.

Beyond bacteria, the gowns may have had organic matter that could be deadly, Schabacker said.

Cardinal placed a hold on several SKUs on Jan. 7. It then determined that it could not differentiate the product that came from the two unauthorized sites and other Siyang facilities, so it put all lots on hold on Jan. 10, notified the FDA and sent notices to customers.

Cardinal, which has replaced products at no cost and deployed employees to help providers, maintained that it acted as it gathered information and determined the scope of the problem.

Johnson City, Tenn.-based Ballad Health canceled about 200 elective surgeries while Allegheny Health Network in Pittsburgh said it had to cancel about a dozen. Services at both institutions resumed promptly. Five other providers Modern Healthcare contacted said there was minimal or no impact.

Hospitals are going through their infection-control protocol and reviewing quality data while Cardinal is reviewing complaints and tests bioburden levels. The company is considering monetary compensation for providers.

Tana Bannow

A new report from Fitch Ratings said not-for-profit hospitals’ and health systems’ median operating margins improved 10% in 2018 year-over-year, with the biggest gains seen among the lowest-rated providers.

Not-for-profit hospitals’ and health systems’ median operating margins bounced back more than 10% in 2018 over the prior year following two straight years of margin declines, with the biggest gains concentrated at the low end of the ratings spectrum, according to a new report from Fitch Ratings.

The median operating margin was 2.1% in 2018 across the 220 not-for-profit hospitals and health systems Fitch rates, compared with 1.9% in 2017. Within that, AA-rated providers saw their median operating margins decline from 5.1% to 4.5% during that time. At the other end of the spectrum, providers rated BBB- saw their margins improve from -1.2% to -0.7%.

It’s a “very good sign” for the industry that the lower-rated credits performed better, as they tend to be more vulnerable to the whims of the market than higher-rated systems, said Kevin Holloran, author of the report and senior director with Fitch.

“We’re not out of the woods yet,” he said. “But it’s important to note those smaller credits made the most meaningful gains. This shouldn’t be a flash in the pan. It should be an industrywide shift.”

Fitch still maintains a negative outlook for the not-for-profit hospital sector, as it has for about two years, but Holloran said the agency will likely revisit that in November or December. He thinks operating profitability bottomed out in 2017, and will continue to inch back up in the coming years.

“The main story this year was we did not see an across-the-board degradation of margins,” Holloran said. “We saw the industry pick itself up by the bootstraps.”

Hospitals and health systems at the lower end of the rating spectrum tend to be nimbler and can implement changes more quickly than larger systems, which tend to be perpetually digesting mergers or other bold changes that draw time and expertise away from fundamental operations, Holloran said. And since lower-rated systems tend to be smaller, even minor gains or losses have a meaningful impact on their overall operating results.

As far as why operational strength is returning to the sector, Holloran said it’s just because they’re doing the “basic blocking and tackling.” They’re getting better at controlling salary and wage costs by staffing people at the top of their licenses and using less traveling personnel, he said. They’re not overstaffing if volume does not require it. They’re not paying overtime because staffing is at appropriate levels.

“That’s literally half your expense base,” Holloran said.

The other half is supplies, which invites questions over utilization practice patterns. How many suture kits are opened during surgeries? Can implants, sponges and gloves be purchased in bulk through a known vendor?

Addressing salary, wage and supply costs covers two-thirds to three-quarters of hospitals’ expense base, Holloran said.

Another crucial area is revenue cycle. Are hospitals billing appropriately? Are bills being denied or sent back?

These aren’t so much “initiatives du jour” as they are a way of life, Holloran said. “I would submit that we in the not-for-profit world have gotten a good dose of for-profit acumen shot into our DNA.”

Outside of hospitals’ own operations, market conditions are also having somewhat of an effect on margins, although that’s a more mixed bag. Low unemployment rates, lots of people getting employer-sponsored insurance and a positive economic environment are all good things. For hospitals, though, a strong job market can make it tough to retain nurses, technicians, coders and others. There’s also the ever-present threat of nontraditional entrants becoming increasingly interested in healthcare.

Margins for hospitals’ median operating earnings before interest, taxes, depreciation and amortization also improved from 2017 and 2018, from 8.5% to 8.6% overall, with the biggest improvements seen in the lowest-rated systems. Systems rated under below investment-grade categories saw their operating EBITDA margins grow from 4.1% in 2017 to 5.8% in 2018. At the other end of the spectrum, all AA category credits did not see a change in their operating EBITDA margins during that time, which remained at 9.9%.

Data from Modern Healthcare Metrics, which aggregates information from the Medicare cost reports that hospitals submit to the CMS annually, identified a decline in median operating margins across not-for-profit hospitals in the years Fitch studied. In 2018, Metrics data show the median operating margin was 3.1% across 1,119 not-for-profit hospitals. In 2017, it was 3.3% across 1,943 not-for-profit hospitals.

Fitch’s new report, 2019 Median Ratios for Nonprofit Hospitals and Healthcare Systems, did not include data on children’s hospitals or hospital districts.

The report notes that hospitals’ liquidity metrics were stable between 2017 and 2018, although they’re at all-time highs for the industry. Overall median cash to debt dropped to 155% in 2018 from 159% in the prior year. Despite improved profitability, the BBB and below investment grade-rated systems saw declines in cash to debt, from 98% in 2017 to 91% in 2018.

Source: https://www.modernhealthcare.com/providers/fitch-small-not-profit-hospitals-see-biggest-margin-rebound