Impact of Conversion to CAH Status on Hospital Financial Performance and Condition (Policy Brief #1)

Publication Date: Nov 2006
Author(s): Holmes GM, Pink GH, Slifkin RT
Research Center(s): North Carolina
Project: Analyzing Financial and Operational Performance of CAHs
Topic(s): Finance
Notes: Policy Brief #1

This policy brief analyzes seven financial ratios associated with Critical Access Hospital profitability, liquidity, and capital structure. Each of 747 hospitals were classified as having “better performance after conversion” or “worse performance after conversion” by comparing the ratio two years prior to conversion to the value two years after conversion.

Key Findings:

  • Most CAHs had higher profitability after conversion than before conversion.
  • About half of CAHs had higher liquidity after conversion than before conversion. 
  • Most CAHs had greater ability to meet debt obligations after conversion than before conversion.
  • CAHs providing long-term care were less likely to improve their profitability than CAHs not providing long-term care.

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