Operating margins were around 4% higher at children's hospitals than at adult hospitals, according to Moody's Investor Services data obtained by Becker's Hospital Review.
Children's hospitals, where median admissions grew 5.6% in 2015, were generally better able to meet patient demand than adult hospitals.
- Changes to Medicaid pose the greatest future risk to revenues at children's hospitals.
Several factors help to explain why finances are stronger at children's hospitals than at adult hospitals.
Demand for high-acuity services and fundraising ability, which is typically not a strong suit for adult hospitals, helps to explain higher operating margins at children’s hospitals. However, financial performance could be affected if Medicaid funding is reduced. Ability to meet patient demand at a higher level than adult hospitals can be partly explained by the lack of competition against children’s hospitals.
While operating margins were stronger at children’s hospitals, revenue growth lagged behind adult hospitals in 2015 for the first time in at least eight years, the data shows. Children’s hospitals saw a median revenue growth of 6.2% compared with 7.5% at adult hospitals.
While Medicaid expansion has had a greater positive effect on revenue growth at adult hospitals, future changes to Medicaid could still have a negative on revenues at children’s hospitals. Medicaid contributed a median 52% of gross revenue at children’s hospitals compared with 14% at adult hospitals and changes to be potentially implemented under a Trump administration could affect top revenue streams.