Massachusetts Acute Hospital Financial Performance: Fiscal Year 2009

Massachusetts Acute Hospital Financial
Performance: Fiscal Year 2009
Division of Health Care Finance and Policy

May 2010
About this Report
This report is prepared in response to M.G.L. c. 118G, section 6A, which requires the Division of Heath Care Finance and
Policy (DHCFP) to assess and report on Massachusetts acute hospital financial performance. It provides a statewide analysis of
acute hospital audited financial data over an eight year period (fiscal year 2002 through fiscal year 2009). The report
examines hospital profitability, liquidity, and capital structure ratios in order to monitor the financial status of acute hospitals.
Presented are industry analyses by quartiles and medians and comparisons of financial performance trends of different
hospital cohorts: teaching, community, and disproportionate share hospitals (DSHs). The report is accompanied by individual
hospital fact sheets detailing financial trends, which are available on the DHCFP website: www.mass.gov/dhcfp.
Summary of Findings for Fiscal Year 2009

• Overall, Massachusetts acute hospital financial performance improved in fiscal year 2009 (FY09) when compared to FY08.
• Most hospitals (80%) reported earning a surplus in FY09 compared to 65% in FY08.
• Reflecting ongoing uncertainties in the economic climate, one third of hospitals experienced non-operating losses in FY09,
about the same is in FY08. Non-operating gains or losses include items which are not related to operations, such as
investment earnings.
• Liquidity slightly improved reflecting the overall improvement in financial performance. Acute hospitals were able to
collect revenue and pay bills in slightly fewer days in FY09 than in FY08.
• Hospitals ability to meet debt obligations slightly improved due to increases in total income across the industry in FY09.
• Teaching versus Community Hospital Performance
– Both teaching and community hospitals reported improved financial performance with increases in median total
margins in FY09 compared with FY08.
• Disproportionate Share Hospital Performance
– Median total profits for all hospitals increased in FY09. However, disproportionate share hospitals’ median total
margin is lower than all other hospitals in FY09. Disproportionate share hospitals had a more difficult time meeting
current liabilities and took about six days longer to pay their bills than all other hospitals in FY09.
Massachusetts Division of Health Care Finance and Policy - 2

Acute Hospital Total Margin
8%
Many hospitals
experienced increases
in total income. The
6% financially weakest
hospitals showed the
5.8% 5.9% 5.8% steepest improvement
in FY09 compared with
4.8% FY08.
4%
3.8% In 2009, thirteen out
3.7%
3.3% of sixty-four hospitals
3.1% 3.1% 3.0% (20%) reported a total
2% 2.6%
2.2% loss compared with
1.7% twenty-three hospitals
1.6% 1.6%
1.2% (35%) during FY08.
0.8% 0.9%
0% 0.4%
0.3% 0.2%
-2% -1.3%
-1.8%
-2.1% Benchmark: Northeast US
median FY08 = 0.9%
-4% Benchmark Source: 2010 Almanac

of Hospital Financial and Operating
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 Indicators, INGENIX
25th percentile Median 75th percentile

Note: Total margin is the ratio of total income to total revenue.

Acute Hospital Operating Margin
6%
Overall, operating
margins have
5%
strengthened, with the
4.7% median operating
4% margin increasing to
1.9% in FY09 from
3% 3.5% 0.7% in FY08.
3.4% 3.4%
2.9% 2.9% Fourteen hospitals
2% (22%) reported a loss
2.1% from operations during
1.8% 1.9% 1.9%
1.7% 1.7% FY09.
1%
0.8% 0.7%
0%
0.2% 0.1% 0.1% 0.1%
0.0%
-1% -0.2%
-1.1%
-2% -1.7%
Benchmark: Northeast US
median FY08 = 0.9%
-3% -2.7% -2.4% Benchmark Source: INGENIX
Consulting based on the hospital
financial database used for the
-4% 2010 Almanac of Hospital
Financial and Operating

Note: Operating margin is the ratio of operating income to total revenue.

Acute Hospital Total and Operating Margins
by Geographic Region
Hospitals in the
Western region of
Massachusetts have
the lowest total and
operating margins in
the state.
Hospitals in the central
and southeast regions
of the state have the
highest total margins
(both at 2.9%) and the
southeast region also
has the highest
operating margin
(3.0%).
■ Negative Total Margin ■ Positive Total Margin
Note: Regions are categorized using the Department of Public Health’s Emergency Medical Services (EMS) Zones.

Acute Hospital Non-Operating Margin
3.5%
3.2% Similar to 2008, many
hospitals continued to
3.0% experience low non-
operating margins in
2.5% 2.5% 2009.
2.5% Twenty two hospitals
2.1% (34%) reported a non-
operating loss during
2.0% FY09.
1.6% 1.6%
1.5% 1.3%
1.2% 1.2%
0.9% 1.1% 0.9%
1.0%
0.7%
0.6% 0.6%
0.5%
0.5% 0.3%
0.2% 0.2% 0.4% 0.2%
median FY08 = 0.07%
0.0%
Benchmark Source: INGENIX
-0.2% -0.2% -0.2% financial database used for the
-0.5% 2010 Almanac of Hospital
Note: Non-operating margin is the ratio of non-operating income to total revenue. Non-operating income includes items not related to operations,
such as investment income, charitable contributions, gains (losses) from the sale of assets and other unrelated business activities (such as
fundraising expenses, and insurance claim or lawsuit settlements). A parent or foundation that holds assets that the hospital controls may incur a
change in beneficial interest in net assets that would be included in the hospital’s non-operating margin.

Acute Hospital Current Ratio
2.5
A high current ratio
indicates the ability to
meet current liabilities
and a lower probability
2.0 2.11 2.11 2.07 of financial insolvency.
2.02 1.99
1.94 1.94 Massachusetts acute
1.85 hospitals’ short term
liquidity slightly
1.5 1.62 1.60 improved with a
1.51 1.53 1.55 median current ratio of
1.50
1.42 1.45 1.5 in FY09, up from
1.45 in FY08.
1.16 1.15 1.19
1.0 1.13 1.14 1.12
1.08
1.03
0.5
median FY08 = 1.55
0.0 Benchmark Source: 2010 Almanac

25th percentile Median

Note: Current ratio is the ratio of current assets to current liabilities.
75th percentile

Acute Hospital Days in Accounts Receivable
70
Days in accounts
61 receivable measures
the average number of
60 56 days that patient
52 receivables are
51 52 outstanding, or the
48 47 47 average collection
50 46
45 45 period.
42 42 42 42 40 The median number of
45 44
40 days taken to collect
revenue shortened by
38 37 two days in FY09
35 36 36 35
30 compared with FY08.
20
10
median FY08 = 46.2
0 Benchmark Source: 2010

Almanac of Hospital Financial and
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 Operating Indicators, INGENIX

Note: Days in accounts receivable is the ratio of net patient accounts receivable to net patient service revenue/(quarters of data x 91.25).

Acute Hospital Average Payment Period
80
Average payment
period measures the
68 68 time it takes a hospital
70 66
63 63 64 to pay current
62 liabilities. High values
60
60 56 57 indicate potential
54 54 liquidity problems.
51 51 51 52
In FY09, the average
50 payment period
ranged from a low of
48
46 46 28 days to a high of
40 43 43 44 44 44 142 days, with the
median being 57 days.
30
20
10 median FY08 = 60.3
Benchmark Source: 2010

0 Operating Indicators, INGENIX
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09
25thperiod
Note: Average payment percentile Median
is the ratio of current 75th percentile
liabilities less estimated third-party settlements to total expenses less depreciation and
amortization/quarters of data x 91.25.

Acute Hospital Debt Service Coverage
6
Debt service coverage
measures the ability to
5.6 meet principal and
5 interest payments in
the coming year.
5.0
Better coverage, as
4.6 4.5 4.5 evidenced by a higher
4 value, results in a
better bond rating.
3.7 3.7 This ratio improved in
3.4 3.4 FY09 due to more
3 3.2 3.2
3 positive financial
performance across
2.5 2.6 2.6 2.5 the industry.
2
2.0 1.9 2.0
1.7 1.7
1 1.2 1.3 1.2
median FY08 = 2.7
Benchmark Source: 2010 Almanac

0 of Hospital Financial and Operating
Indicators, INGENIX
25th
Note: Debt service percentile
coverage Median
is the ratio of total income plus interest75th percentile
expense plus depreciation and amortization to interest
expense plus current portion of long-term debt.

Acute Hospital Cash Flow to Total Debt
30%
Cash flow to total debt
indicates the potential
28.0% for future financial
27.5%
25% problems or
insolvency.
25.0% 24.6%
This ratio improved in
FY09 due to improving
20% financial performance
20.3% 20.4% 20.4%
19.3% across the industry.
18.1% 18.2%
16.5% 17.6%
15%
14.9%
13.9%
13.5%
12.3% 12.1%
10% 11.4%
10.5% 10.5%
9.3% Benchmark: Northeast US
median FY08 = 12.5%
7.6% 7.7%
5% 6.3% Benchmark Source: 2010 Almanac
Indicators, INGENIX
0%

Note: Cash flow to total debt is the ratio of total income plus depreciation and amortization to total current liabilities plus total
long-term debt.

Acute Hospital Equity Financing
70%
Equity financing
measures the
63.9% proportion of total
60% assets financed with
61.1% 60.9% 61.0% 61.0%
58.7% 58.0% equity.
55.7% In FY09 acute
50%
hospitals’ equity
48.8% financing declined,
reflecting some
40% 43.7% 42.7% 43.1% 43.2% hospitals’ declining
41.6% 41.9%
position in net assets.
37.9%
A number of hospitals
30% 33.3% 32.9% experienced an
actuarial reconciliation
26.9% 27.1% 28.2%
26.2% 25.5% of pension related
20% assets and obligations
in FY09 which had a
18.7% negative impact on
net assets.
10%
median FY08 = 47.9%

0% Almanac of Hospital Financial and
Operating Indicators, INGENIX

Note: Equity financing is the ratio of total net assets to total assets.

Teaching and Community Hospitals
• In this analysis, the Division of Health Care Finance and Policy defined teaching hospitals according to the Medicare Payment Advisory Commission’s
(MedPAC) definition of a major teaching hospital: at least 25 full time equivalent medical school residents per one hundred inpatient beds.
• Based on this definition and using a 2006 base year, the 15 hospitals listed below were assigned to the teaching cohort for all the years of this analysis.
Teaching Hospitals Community Hospitals
Baystate Medical Center Anna Jaques Hospital Marlborough Hospital

Beth Israel Deaconess Medical Center Athol Memorial Hospital Martha's Vineyard Hospital
Boston Medical Center Baystate Franklin Medical Center Mercy Medical Center
Brigham and Women's Hospital Baystate Mary Lane Hospital Merrimack Valley Hospital
Cambridge Health Alliance Berkshire Medical Center MetroWest Medical Center
Caritas St. Elizabeth's Medical Center Beth Israel Deaconess Hospital-Needham Milford Regional Medical Center
Children's Hospital Boston Cape Cod Hospital Milton Hospital
Dana-Farber Cancer Institute Caritas Carney Hospital Morton Hospital and Medical Center
Lahey Clinic Caritas Good Samaritan Medical Center Nantucket Cottage Hospital
Massachusetts Eye and Ear Infirmary Caritas Holy Family Hospital Nashoba Valley Medical Center
Massachusetts General Hospital Caritas Norwood Hospital New England Baptist Hospital
Mount Auburn Hospital Clinton Hospital Newton-Wellesley Hospital
Saint Vincent Hospital Cooley Dickinson Hospital Noble Hospital
Tufts Medical Center Emerson Hospital North Adams Regional Hospital
UMass Memorial Medical Center Fairview Hospital North Shore Medical Center
Falmouth Hospital Northeast Hospital
Faulkner Hospital Quincy Medical Center
Hallmark Health Saint Anne's Hospital
Harrington Memorial Hospital Saints Medical Center
Health Alliance Hospital Signature Healthcare Brockton Hospital
Heywood Hospital South Shore Hospital
Holyoke Medical Center Southcoast Hospitals Group
Hubbard Regional Hospital Sturdy Memorial Hospital
Jordan Hospital Winchester Hospital
Lawrence General Hospital Wing Memorial Hospital and Medical Centers
Lowell General Hospital

Acute Hospital Median Total Margin
Teaching vs. Community Hospitals
8%
Both teaching and
7.2%
community hospitals
7% experienced increases
in median total margin
6.0% in FY09 compared with
6% FY08.
4.9% 5.1% Teaching hospitals had
higher profitability than
5% community hospitals in
each of the past eight
years.
4%
3.1% 3.9% The median total
3.0% 3.1% 3.0% margin was 5.1% for
3% teaching hospitals
2.2% compared with 1.7%
2.8% 2.7% for community hospitals
1.8% 2.5%
2% 1.6% in FY09.
1.3%
1.2% 0.9% 1.7%
1%
1.1%
0.9% 0.8% Benchmark: Northeast US
0.3% median FY08 = 0.9%
0% Benchmark Source: 2010 Almanac
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 of Hospital Financial and Operating
Indicators, INGENIX
Teaching Community Statewide


Acute Hospital Total Margin
Teaching vs. Community Hospitals, FY09
The overall financial

Median: 5.1% Median: 1.7% performance of acute
8.4% hospitals varies widely
7.3% by teaching status.
Three teaching
hospitals (20%)
reported losses in FY09
Overall compared with five
2.2% Median
(33%) in FY08. Ten
community hospitals
(20%) reported losses
in FY09 compared with
eighteen (36%) in
FY08.
-6.96%
median FY08 = 0.9%
-15.1%
Indicators, INGENIX

Acute Hospital Median Operating Margin
5.0%
5%
The median operating
margin improved for
4.1% community hospitals
and teaching hospitals
4% in FY09 compared
with FY08.
3.2% 3.1% The median operating

margin for teaching
2.8% hospitals was
3%
significantly higher in
FY09 than it was for
community hospitals
2.0% 1.9% in FY08 (5% vs.
1.9%
2% 1.7% 1.7% 1.5%).
1.8%
1.2% 1.0% 1.5%
1.4%
1% 0.8%
1.1% 0.7%
median FY08 = 0.9%
0.4%
0% 0.0% 0.1%
0.0% Almanac of Hospital Financial and
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 Operating Indicators, INGENIX


Acute Hospital Operating Margin
Teaching Hospitals Community Hospitals Operating margin

Median: 5.0% Median: 1.5%
performance varied
widely by teaching
status in FY09.
8.4% 8.4%
Five teaching hospitals
(33%) and nine
community hospitals
(18%) reported
operating losses in
Overall
1.9% Median FY09.
-8.1%
median FY08 = 0.9%

Operating Indicators, INGENIX
-18.5%

Acute Hospital Median Non-Operating Margin
5%
4.6% Teaching hospitals
experienced an
improvement in their
4% median non-operating
margin in FY09
compared with FY08.
Community hospitals’
3% median non-operating
2.5% margin, however,
continued to decline.
1.9%
The median non-
2% 1.7% operating margin was
1.6%
1.3% slightly higher for
1.2% teaching hospitals
1.0% 0.9% 1.0%
1.4% compared with
1% 1.1%
0.6% 0.7% 1.1% community hospitals
0.8% 0.5% in FY09 (1% and
0.3% 0.2% 0.2%).
0.6% 0.4%
0% 0.2% 0.2%
median FY08 = 0.07%
-0.1% Benchmark Source: INGENIX
2010 Almanac of Hospital
-1% Financial and Operating

Note: Non-operating margin is the ratio of non-operating income to total revenue.

Acute Hospital Non-Operating Margin
Four teaching hospitals

Median: 1.0% Median: 0.2% (27%) and nineteen
community hospitals
(39%) reported non-
operating losses in
5.4% FY09.
3.4%
Overall
0.2% Median
-1.1%
median FY08 = 0.07%
Benchmark Source: INGENIX

2010 Almanac of Hospital
Indicators, INGENIX
-8.3%

Acute Hospital Median Current Ratio
1.90
Current ratios for
teaching and
1.82 community hospitals
1.80 have varied over time.
However, in FY09 the
1.72 median current ratio
improved among
1.70 teaching and
community hospitals.
1.62 1.61
1.60
1.60 1.58
1.51 1.53 1.55

1.54 1.50
1.50 1.49
1.46
1.50 1.50 1.44 1.45 1.49
1.42 1.44
1.40 Benchmark: Northeast US
median FY08 = 1.55
1.39 Benchmark Source: 2010 Almanac
1.36 of Hospital Financial and Operating
Indicators, INGENIX
1.30
Teaching Community
Statewide

Acute Hospital Median Days in Accounts Receivable
53 In FY09 teaching
53
hospitals took about
four days longer than
51 52 community hospitals to
51 collect revenue.
49
47
46
45
45
43 44
43
42 42 42 42
41
41
39 40 40 40
39 Benchmark: Northeast US
median FY08 = 46.2
37
36 Indicators, INGENIX
35


Acute Hospital Median Average Payment Period
59
In FY09, community
hospitals took roughly
58 58 three days longer than
teaching hospitals to
57 pay their bills (58 and
57 57 55 days, respectively).
56
56 56 56
55
55 55 55
54
54 54
53
53
52
52 52
51
51 51 51 Benchmark: Northeast US
median FY08 = 60.3
50
50 49 Benchmark Source: 2010 Almanac
Note: Average payment Teaching Community

period is the ratio of current Statewide

Acute Hospital Median Debt Service Coverage
4.5
4.2 4.3 Teaching hospitals
were better able to
meet principal and
4.0 3.9 interest payments than
community hospitals in
FY09.
3.7 However, the median
3.5 debt service coverage
3.3
ratio improved for both
3.4 teaching and com-
3.2 3.2 munity hospitals in
3.0 FY09 compared to
2.7 3.0 FY08.
2.6 2.9
2.6
2.5 2.5
2.5
2.4 2.4
2.0
2.0
1.9 median FY08 = 2.7

Indicators, INGENIX
Teaching
Note: Debt service coverage is the ratio of totalCommunity Statewide
income plus interest expense plus depreciation and amortization to interest

Acute Hospital Median Cash Flow to Total Debt
25%
Cash flow to total debt
22.2% ratios show similar
21.6%
20.6% trends by teaching
20.5% status. Both teaching
20% 20.5% 20.5% and community
18.2% hospitals experienced
18.1% 17.6% 19.0% increases in this metric
16.4%18.8% in FY09.
17.8%
17.4% 14.9%
15% The lower this ratio,
13.1% 12.4% 13.9% 14.8% the more likely a
hospital will find it
13.0% difficult to meet
11.4%
current and long term
10.5% financing needs.
10% 11.1%
9.8%
5%
median FY08 = 12.5%

Note: Cash flow to total Teaching

debt is the ratio of total Community Statewide
income plus depreciation and amortization to total current liabilities plus total
long-term debt.

Acute Hospital Median Equity Financing
54.7%
55%
Teaching hospitals
currently have greater
equity financing than
community hospitals,
50% although the median
48.7% 48.9% equity financing ratio
47.4% 48.3% declined for both
45.9%
teaching and
community hospitals in
45% FY09.
42.4% 43.7% 42.4% A number of hospitals
42.3% 43.1% 43.2%
42.7% experienced an
41.6% 41.9% 43.1% 43.0% 43.4%
40% 40.5% 40.4% 40.3% of pension related
assets and obligations
37.9% in FY09 which had a
negative impact on net
assets.
35%
34.8%
median FY08 = 47.9%



Disproportionate Share and All Other
Hospitals
• In this analysis, the Division of Health Care Finance and Policy defines disproportionate share hospitals as those hospitals with a large percentage (63%
or more) of patient charges attributed to Medicare, Medicaid, other government payers, and free care.
• Based on this definition and using a 2007 base year, the 18 hospitals listed below were assigned to the disproportionate share hospital cohort for all the
years of this analysis.
Disproportionate Share Hospitals All Other Hospitals
Berkshire Medical Center Anna Jaques Hospital Lowell General Hospital

Boston Medical Center Athol Memorial Hospital Marlborough Hospital
Cambridge Health Alliance Baystate Franklin Medical Center Martha's Vineyard Hospital
Cape Cod Hospital Baystate Mary Lane Hospital Massachusetts Eye and Ear Infirmary
Caritas Carney Hospital Baystate Medical Center Massachusetts General Hospital
Caritas Good Samaritan Medical Center Beth Israel Deaconess Medical Center MetroWest Medical Center
Caritas St. Elizabeth's Medical Center Beth Israel Deaconess Hospital-Needham Milford Regional Medical Center
Clinton Hospital Brigham and Women's Hospital Milton Hospital
Holyoke Medical Center Caritas Holy Family Hospital Morton Hospital and Medical Center
Lawrence General Hospital Caritas Norwood Hospital Mount Auburn Hospital
Mercy Medical Center Children's Hospital Boston Nantucket Cottage Hospital
Merrimack Valley Hospital Cooley Dickinson Hospital Nashoba Valley Medical Center
North Adams Regional Hospital Dana-Farber Cancer Institute New England Baptist Hospital
Quincy Medical Center Emerson Hospital Newton-Wellesley Hospital
Saint Anne’s Hospital Fairview Hospital Noble Hospital
Saints Medical Center Falmouth Hospital North Shore Medical Center
Signature Healthcare Brockton Hospital Faulkner Hospital Northeast Hospital
Southcoast Hospitals Group Hallmark Health South Shore Hospital
Harrington Memorial Hospital Saint Vincent Hospital
HealthAlliance Hospital Sturdy Memorial Hospital
Heywood Hospital Tufts Medical Center
Hubbard Regional Hospital UMass Memorial Medical Center
Jordan Hospital Winchester Hospital
Lahey Clinic Wing Memorial Hospital and Medical Centers

Acute Hospital Median Total Margin
Disproportionate Share vs. All Other Hospitals
5%
Disproportionate share
4.2% hospitals generally
have lower total
4% profitability than other
3.6% hospitals.
3.3% Median total profits for
all hospitals increased
3.1% 3.1%
3% 3.0% in FY09. However,
2.5% disproportionate share
2.7% hospitals’ median total
2.5% 2.2% margin is lower than
1.9%
2% all other hospitals in
FY09 (1.1% and
1.3% 1.6% 2.5%).
1.0%
1% 1.2% 0.9% 1.1%
0.4%
0.8%
0.7%
0.3%
0% 0.2%
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 median FY08 = 0.9%
-0.4% Benchmark Source: 2010 Almanac

-1% Indicators, INGENIX
DSH All Other Statewide


Acute Hospital Median Operating Margin
3%
Historically,
disproportionate share
hospitals tend to be
2.3% 2.3%
2.2% less profitable from
operations than other
2% 1.9% 1.9% hospitals.
1.9% Median operating
margin improved for
1.7% 1.7% all hospitals in FY09
1.1% compared with FY08,
1.3% but more sharply for
1% all other hospitals than
for disproportionate
0.6%
0.5% share hospitals.
0.8%
0.7%
0.2% 0.5%
0.4% 0.3%
0.0%
0% 0.0%
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 Benchmark: Northeast US
median FY08 = 0.9%
-0.4% Benchmark Source: 2010 Almanac

-0.5% of Hospital Financial and Operating
Indicators, INGENIX
-1%


Acute Hospital Median Non-Operating Margin
2.0%
Non-operating profits
1.8%
continued to decline
for many hospitals in
FY09 due in large part
1.6%
to the economic
1.5% climate.
1.3% 1.3%
1.2%
1.0%
1.0% 1.1%
0.8% 0.9%
0.9%
0.7%
0.5% 0.7%
0.5% 0.5%
0.3% median FY08 = 0.07%
0.2%
0.3% Benchmark Source: INGENIX
0.2% Consulting based on the hospital
0.1% 0.1% financial database used for the
0.0% 2010 Almanac of Hospital


Acute Hospital Median Current Ratio
1.8 Disproportionate share

hospitals’ ability to pay
current bills is not as
1.69 1.67 1.69 strong as that of other
1.7
hospitals.
1.62 1.62
Their median current
1.59
1.6 ratio of 1.33 in FY09
1.62
1.60 was lower than the
statewide median of
1.54 1.55 1.48 1.5.
1.5 1.53 1.47
1.51 1.50
1.50
1.45
1.4
1.42
1.3 1.33 1.33 1.33

1.34
1.30
1.28
1.2 Benchmark: Northeast US
median FY08 = 1.55

1.1 Indicators, INGENIX


Acute Hospital Median Days in Accounts Receivable
54
Disproportionate share
52 52 hospitals took about
52 the same number of
days to collect their
51 accounts receivables
50
as all other hospitals in
FY09.
48
48
46
46 45
44 43
44
42
42 42 42 42
40
40
40
38 39 median FY08 = 46.2
38 38 Benchmark Source: 2010 Almanac



Acute Hospital Median Average Payment Period
63
Historically, dispropor-
61 tionate share hospitals
61 have taken longer to
60 pay bills than other
59 hospitals.
59 58 In FY09, dispropor-
tionate share hospitals
57 took about six days
57 56 56 57 longer to pay their bills
56 than all other
hospitals.
55
54 54 54 54 54
53
53 53 52
51 51 51 51
49 median FY08 = 60.3
49 49
Note: Average payment periodDSHis the ratio of All Other

current Statewide

Acute Hospital Median Debt Service Coverage
4.5
4.2 All hospitals on
average show an
3.9 improvement in
4.0 meeting current debt
3.7 obligations in FY09
3.5 compared with FY08.
3.5 3.7
However, in general,
disproportionate share
3.4
hospitals have a more
3.0 3.2 3.2 difficult time meeting
2.8
3 debt obligations than
2.6 2.6 do all other hospitals.
2.5 2.6
2.5 2.5
2.3
2.0 2.0 2.2
1.9 2.0 1.9

1.5 1.7
1.5 median FY08 = 2.7

Indicators, INGENIX
Note: Debt service coverage DSH Allincome

is the ratio of total Other Statewide
plus interest expense plus depreciation and amortization to interest

Acute Hospital Median Cash Flow to Total Debt
22%
20.7% 20.5% All hospitals’ cash flow
20.3% to total debt ratio
19.7% 20.5%
20% improved in FY09 from
19.0% 19.5% FY08, signaling less
difficulty meeting debt
18% 18.2% obligations.
17.6%
16.0%
16%
15.8%
14.9%
14% 13.1% 12.9% 13.9%
13.6%
12%
11.4%
10.5% 11.4% 12.3%
10%
9.9%
median FY08 = 12.5%
8%
8.3% 8.4%
Indicators, INGENIX
6%

Note: Cash flow to total debt is the ratio of total income plus depreciation and amortization to total current liabilities plus total
long-term debt.

Acute Hospital Median Equity Financing
55% 53.4% The median equity

financing ratio
decreased for all
hospitals in FY09
49.4%
50% 48.4%
compared with FY08.
48.2%
A number of hospitals
48.9% experienced an
47.5%
44.5% of pension related
45% 43.9%
assets and obligations
in FY09 which had a
43.7% negative impact on net
43.1% 43.2%
42.7% assets.
41.6% 41.9%
40% 38.7%
39.6% 37.9%
37.7%
35% 36.5% 36.3%
35.5% 35.6%
33.9%
median FY08 = 47.9%



Acute Hospital Financial Performance
FY09
Hospitals Operating Non-Operating Total Margin Profit (Loss) Hospitals Operating Non- Total Margin Profit (Loss)
Margin Margin Margin Operating
Margin
Teaching Community
Baystate Medical Center 7.17% -0.30% 6.86% $59,557,000 Harrington Memorial Hospital 3.55% -0.57% 2.98% 2,577,772
Beth Israel Deaconess Medical Center 0.47% 1.61% 2.07% $26,070,000 Health Alliance Hospital 4.71% 0.30% 5.01% 8,361,742
Boston Medical Center* -2.53% 1.41% -1.13% ($11,329,000) Heywood Hospital 1.11% -0.66% 0.45% 403,756
Brigham and Women's Hospital 5.03% 0.03% 5.06% $105,500,000 Holyoke Medical Center* 0.56% 0.06% 0.62% 732,174
Cambridge Health Alliance* -8.13% 1.17% -6.96% ($36,959,136) Hubbard Regional Hospital closed
Caritas St. Elizabeth's Medical Center* 6.10% -0.25% 5.85% $22,335,669 Jordan Hospital 1.00% 0.44% 1.44% 2,694,255
Children's Hospital Boston 5.58% 1.19% 6.78% $88,388,000 Lawrence General Hospital* 1.29% 0.04% 1.33% 2,295,000
Dana-Farber Cancer Institute -5.30% 5.39% 0.09% $734,917 Lowell General Hospital 2.77% -1.15% 1.62% 3,484,314
Lahey Clinic 4.60% 0.99% 5.63% $49,315,126 Marlborough Hospital 1.50% 0.88% 2.38% 1,600,000
Massachusetts Eye and Ear Infirmary -0.48% 3.46% 2.98% $6,622,712 Martha's Vineyard Hospital 0.95% 2.09% 3.04% 1,494,444
Massachusetts General Hospital 4.97% 0.00% 4.97% $131,887,000 Mercy Medical Center*
Mount Auburn Hospital 5.67% 1.02% 6.68% $19,617,000 Merrimack Valley Hospital* -2.32% 0.00% -2.32% -1,296,298
Saint Vincent Hospital 8.41% -0.01% 8.41% $26,792,304 MetroWest Medical Center -4.03% 0.15% -3.88% -9,615,651
Tufts Medical Center -1.04% -1.14% -2.18% ($13,250,000) Milford Regional Medical Center 4.88% 0.26% 5.15% 9,634,717
UMass Memorial Medical Center 4.97% 0.34% 5.31% $70,615,377 Milton Hospital -0.04% -2.27% -2.32% -1,509,891
Community Morton Hospital and Medical Center 3.87% 0.32% 4.19% 5,501,692
Anna Jaques Hospital 2.55% -0.06% 2.49% $2,663,837 Nantucket Cottage Hospital -18.50% 3.39% -15.10% -5,005,000
Athol Memorial Hospital -6.03% 0.19% -5.84% ($1,314,156) Nashoba Valley Medical Center 1.35% 0.00% 1.35% 604,163
Baystate Franklin Medical Center -0.01% 0.69% 0.68% $574,000 New England Baptist Hospital 0.61% 2.61% 3.22% 6,043,000
Baystate Mary Lane Hospital 0.62% 2.50% 3.12% $1,042,000 Newton-Wellesley Hospital 3.86% 0.05% 3.91% 14,088,000
Berkshire Medical Center* 0.17% -0.55% -0.38% ($1,242,388) Noble Hospital -1.66% 0.14% -1.52% -844,131
Beth Israel Deaconess Hospital-Needham 3.36% 0.33% 3.69% $1,795,560 North Adams Regional Hospital* -0.68% -4.53% -5.21% -3,085,733
Cape Cod Hospital* 2.30% 0.56% 2.86% $10,710,633 North Shore Medical Center 1.35% 0.15% 1.50% 6,613,000
Caritas Carney Hospital* 4.29% 0.45% 4.75% $5,701,001 Northeast Hospital 1.70% -0.98% 0.72% 2,295,347
Caritas Good Samaritan Medical Center* 6.42% 0.17% 6.58% $12,990,838 Quincy Medical Center* -1.47% -0.13% -1.60% -1,760,117
Caritas Holy Family Hospital 4.09% 0.00% 4.09% $6,016,157 Saint Anne's Hospital* 6.36% 0.99% 7.35% 10,627,070
Caritas Norwood Hospital 2.17% 0.26% 2.43% $3,892,833 Saints Medical Center* 0.09% 0.49% 0.58% 783,000
Clinton Hospital* 1.33% 1.50% 2.83% $743,000 Signature Healthcare Brockton Hospital* 2.11% -1.01% 1.10% 2,229,682
Cooley Dickinson Hospital 4.68% 0.40% 5.08% $8,534,929 South Shore Hospital 3.00% -4.42% -1.42% -5,458,354
Emerson Hospital 0.55% -0.28% 0.28% $494,413 Southcoast Hospitals Group* 2.96% -0.96% 2.00% 12,308,413
Fairview Hospital 2.05% -0.37% 1.68% $655,585 Sturdy Memorial Hospital 8.39% -8.33% 0.06% 81,575
Falmouth Hospital 5.90% 0.85% 6.76% $9,589,738 Winchester Hospital 4.00% -0.08% 3.92% 10,005,952
Faulkner Hospital 1.54% 0.24% 1.78% $3,215,000 Wing Memorial Hospital 0.04% 0.59% 0.62% 440,000
Hallmark Health 4.81% 1.39% 6.20% $17,151,000
*Denotes Disproportionate Share Hospital.
Notes: Mercy Hospital has a 12/31 year end and data for Mercy were not yet available at the time this analysis was completed.

Acute Hospital Financial Performance
FY08
Hospitals Operating Non-Operating Total Margin Profit (Loss) Hospitals Operating Non- Total Margin Profit (Loss)
Margin Margin Margin Operating
Margin
Teaching Community
Baystate Medical Center 5.48% 0.86% 6.34% $53,334,000 Harrington Memorial Hospital -3.34% 3.82% 0.48% $364,687
Beth Israel Deaconess Medical Center 2.46% 0.77% 3.23% $39,328,000 Health Alliance Hospital 5.45% -0.79% 4.66% $7,377,665
Boston Medical Center* 6.44% -1.27% 5.17% $54,986,048 Heywood Hospital -0.60% 1.41% 0.81% $720,349
Brigham and Women's Hospital 5.15% -0.13% 5.03% $95,721,000 Holyoke Medical Center* -0.99% 0.21% -0.78% ($951,615)
Cambridge Health Alliance* -6.77% 1.25% -5.51% ($29,448,181) Hubbard Regional Hospital -8.19% -0.32% -8.51% ($1,874,597)
Caritas St. Elizabeth's Medical Center* 1.83% -2.24% -0.41% ($1,483,929) Jordan Hospital -0.90% 0.50% -0.40% ($728,020)
Children's Hospital Boston 4.07% 1.26% 5.33% $63,381,000 Lawrence General Hospital* 1.64% 0.87% 2.51% $4,120,000
Dana-Farber Cancer Institute -5.58% -1.69% -7.27% ($49,469,327) Lowell General Hospital 1.22% -0.18% 1.04% $1,966,929
Lahey Clinic 3.83% -0.07% 3.76% $30,111,095 Marlborough Hospital -0.61% 0.68% 0.08% $49,977
Massachusetts Eye and Ear Infirmary -9.42% 7.04% -2.37% ($3,589,528) Martha's Vineyard Hospital 2.20% 3.49% 5.69% $2,647,444
Massachusetts General Hospital 4.62% -0.31% 4.31% $106,649,000 Mercy Medical Center* n/a n/a n/a n/a
Mount Auburn Hospital 5.09% -1.20% 3.89% $10,501,964 Merrimack Valley Hospital* -6.01% 0.00% -6.01% ($3,275,192)
Saint Vincent Hospital 7.44% -0.01% 7.42% $22,196,757 MetroWest Medical Center -3.62% 0.21% -3.41% ($8,116,041)
Tufts Medical Center -1.14% -1.39% -2.53% ($14,673,000) Milford Regional Medical Center 3.39% 2.04% 5.43% $9,542,160
UMass Memorial Medical Center 4.08% 0.19% 4.27% $53,129,554 Milton Hospital -4.64% 1.77% -2.87% ($1,750,890)
Community Morton Hospital and Medical Center 0.36% 3.79% 4.14% $5,328,626
Anna Jaques Hospital 0.73% 0.12% 0.85% $850,914 Nantucket Cottage Hospital -8.13% 6.56% -1.57% ($527,000)
Athol Memorial Hospital 0.68% 0.45% 1.12% $257,812 Nashoba Valley Medical Center -0.96% 0.00% -0.96% ($427,612)
Baystate Franklin Medical Center -2.48% 1.04% -1.43% ($1,180,000) New England Baptist Hospital 0.96% 2.71% 3.68% $6,587,000
Baystate Mary Lane Hospital -1.04% 2.03% 0.99% $321,000 Newton-Wellesley Hospital 2.87% 0.94% 3.81% $12,870,000
Berkshire Medical Center* 2.14% 1.54% 3.68% $11,957,432 Noble Hospital -0.86% 0.32% -0.55% ($294,163)
Beth Israel Deaconess Hospital-Needham 1.39% 0.40% 1.79% $818,552 North Adams Regional Hospital* 5.48% 1.26% 6.75% $4,334,579
Cape Cod Hospital* -4.05% 0.88% -3.17% ($11,362,263) North Shore Medical Center 0.44% 0.21% 0.64% $2,813,000
Caritas Carney Hospital* 0.70% 0.44% 1.14% $1,334,649 Northeast Hospital 1.71% -3.01% -1.30% ($3,843,899)
Caritas Good Samaritan Medical Center* 0.00% 0.00% 0.00% $8,417 Quincy Medical Center* -2.33% -0.21% -2.54% ($2,677,752)
Caritas Holy Family Hospital 1.31% 0.00% 1.31% $1,976,575 Saint Anne's Hospital* 3.71% -4.51% -0.81% ($1,077,037)
Caritas Norwood Hospital -2.50% -1.37% -3.87% ($5,814,182) Saints Medical Center* -1.12% -1.37% -2.49% ($3,281,000)
Clinton Hospital* 1.01% 1.96% 2.97% $785,447 Signature Healthcare Brockton Hospital* -3.18% 0.55% -2.63% ($5,158,093)
Cooley Dickinson Hospital 2.33% 0.81% 3.13% $5,101,153 South Shore Hospital 1.86% -1.65% 0.20% $716,924
Emerson Hospital -2.53% 1.06% -1.47% ($2,448,065) Southcoast Hospitals Group* 2.58% -1.22% 1.36% $8,129,570
Fairview Hospital 3.55% 0.95% 4.50% $1,592,437 Sturdy Memorial Hospital 8.49% -2.23% 6.26% $9,230,619
Falmouth Hospital -3.09% 3.89% 0.80% $1,099,294 Winchester Hospital 2.89% 0.23% 3.12% $7,583,429
Faulkner Hospital -0.28% 0.55% 0.27% $471,000 Wing Memorial Hospital 0.50% 0.60% 1.10% $702,734
Hallmark Health 0.44% 0.47% 0.91% $2,450,000
*Denotes Disproportionate Share Hospital.
Notes: Recently, government employers, including Cambridge Health Alliance, were required to implement a new government accounting rule (GASB 45) that required them to record in their financial
statements the present value of future retiree health benefit costs. In complying with this new rule, Cambridge Health Alliance’s balance sheet reflects a $221.9M liability and associated operating expense of
$12.7M for its 2008 fiscal year. Mercy Hospital has a 12/31 year end and data for Mercy were not yet available at the time this analysis was completed.

Report Notes
• The findings in this report are based on the filings of 64 of 65 acute hospitals in 2009; sixty hospitals have
fiscal year ends October 1 through September 30. Five hospitals have different year ends: Cambridge Health
Alliance, MetroWest Medical Center, and Saint Vincent Hospital have June 30 year ends, and Martha’s Vineyard
Hospital has a March 31 year end. Mercy Medical Center has a December 31 year end. Mercy Medical Center’s
data were not yet available at the time this analysis was completed.
• Annual financial data are reviewed by the Division of Health Care Finance and Policy and verified against either
audited financial statements or hospital’s supporting documentation. All submitted hospitals’ data reviews were
complete at the time of this analysis except for North Adams Hospital for which as filed data has been used.
• Depending on the organization of each hospital, data may exclude other aspects of some hospitals’ financial
health, such as financial performance of endowments or the financial health of parent companies or other
affiliated organizations.
• Quartile values can shed light on information about the distribution of financial ratio values across hospitals.
Often, averages can be materially affected by outlier/extreme values at the low and high ends of a distribution.
Examining quartiles, therefore, is a preferred means of assessing the overall distribution of values across
hospitals. For instance, the ratio values of one-quarter of the hospitals at the lower end of the distribution will
fall at or below the 25th quartile value. Similarly, the ratio values of one-quarter of the hospitals at the upper
end of the distribution will fall at or above the 75th quartile value. The 50th percentile is the median of the
distribution of values. Half of the hospitals’ financial ratio values will fall below the median, and half will fall
above the median. These quartile measures are particularly useful when a distribution is markedly skewed, or
where it is generally symmetrical but includes a few outliers.
• This report uses benchmarks from data available in the 2010 Almanac of Hospital Financial and Operating
Indicators published by Ingenix. There is a two-year lag from the publication data, therefore the most current
benchmark data for this report are 2008 data.

Division of Health Care Finance and Policy
Two Boylston Street
Boston, Massachusetts 02116
Phone: (627) 988-3100
Fax: (617) 727-7662
Website: www.mass.gov/dhcfp
Publication Number: 09-177-HCF-01

Authorized by Ellen Bickelman, State Purchasing Agent
Printed on Recycled Paper

Massachusetts Acute Hospital Financial Performance: Fiscal Year 2009

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Massachusetts Acute Hospital Financial Performance: Fiscal Year 2009

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Massachusetts Acute Hospital Financial

Performance: Fiscal Year 2009

Division of Health Care Finance and Policy

Summary of Findings for Fiscal Year 2009

Massachusetts Division of Health Care Finance and Policy - 2

-4% Benchmark Source: 2010 Almanac

25th percentile Median 75th percentile

Massachusetts Division of Health Care Finance and Policy - 3

25th percentile Median 75th percentile

Massachusetts Division of Health Care Finance and Policy - 4

■ Negative Total Margin ■ Positive Total Margin

Massachusetts Division of Health Care Finance and Policy - 5

Massachusetts Division of Health Care Finance and Policy - 6

0.0 Benchmark Source: 2010 Almanac

25th percentile Median

Massachusetts Division of Health Care Finance and Policy - 7

0 Benchmark Source: 2010

25th percentile Median 75th percentile

Massachusetts Division of Health Care Finance and Policy - 8

Benchmark Source: 2010

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

Massachusetts Division of Health Care Finance and Policy - 9

Benchmark Source: 2010 Almanac

Massachusetts Division of Health Care Finance and Policy - 10

25th percentile Median 75th percentile

Massachusetts Division of Health Care Finance and Policy - 11

Benchmark Source: 2010

25th percentile Median 75th percentile

Massachusetts Division of Health Care Finance and Policy - 12

Teaching Hospitals Community Hospitals

Baystate Medical Center Anna Jaques Hospital Marlborough Hospital

Massachusetts Division of Health Care Finance and Policy - 13

Teaching Community Statewide

Massachusetts Division of Health Care Finance and Policy - 14

The overall financial

Note: Total margin is the ratio of total income to total revenue.

Massachusetts Division of Health Care Finance and Policy - 15

3.2% 3.1% The median operating

Teaching Community Statewide

Massachusetts Division of Health Care Finance and Policy - 16

Teaching Hospitals Community Hospitals Operating margin

Benchmark Source: 2010

Massachusetts Division of Health Care Finance and Policy - 17

Teaching Community Statewide

Massachusetts Division of Health Care Finance and Policy - 18

Four teaching hospitals

Benchmark Source: INGENIX

Note: Non-operating margin is the ratio of non-operating income to total revenue.

Massachusetts Division of Health Care Finance and Policy - 19

1.51 1.53 1.55

Massachusetts Division of Health Care Finance and Policy - 20

Teaching Community Statewide

Massachusetts Division of Health Care Finance and Policy - 21

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

Note: Average payment Teaching Community

Massachusetts Division of Health Care Finance and Policy - 22

Benchmark Source: 2010 Almanac

Massachusetts Division of Health Care Finance and Policy - 23

0% Benchmark Source: 2010 Almanac

Note: Cash flow to total Teaching

Massachusetts Division of Health Care Finance and Policy - 24

30% Benchmark Source: 2010 Almanac