How investors evaluate the creditworthiness of hospitals

Responding to health care's turbulent economy of the 1980s, investors in hospital bonds have revised the way they conduct a hospital credit analysis. This new thinking is reflected in a 10-step method that examines the hospital's operating margin and cash from operations; its Medicare and Medicaid receivables; occupancy and admission levels; security provisions of the bond; and other important factors. Healthcare financial managers can use the analysis as a guide to self-assessment.