Understanding Various Measures to Assess Hospital Finances: A Cheat Sheet

Profit margins are the most common measure of financial performance. They can be positive (if the hospital earns a profit) or negative (if the hospital loses money). Reported margins vary depending on the measure used, how the measure is calculated, the data, accounting decisions, and how data are summarized (e.g., averages vs medians). Several other measures are also useful for understanding a hospital’s financial position, such as days cash on hand. Comparing measures across hospitals can be difficult due to a lack of standardized reporting requirements. Explore more key facts about hospitals and their finances.