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.
• 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 - 1

8%
6%
4%
2% 2.6%
0%
0.3%
5.8% 5.9% 5.8%
4.8%
3.3%
1.2%
3.7%
3.1%
1.6%
0.2%
0.8%
3.1%
1.6%
3.0%
1.7%
3.8%
2.2%
0.9%
0.4%
Many hospitals experienced increases in total income. The financially weakest hospitals showed the steepest improvement in FY09 compared with
FY08.
In 2009, thirteen out of sixty-four hospitals
(20%) reported a total loss compared with twenty-three hospitals
(35%) during FY08.
-2%
-2.1%
-1.8%
-4%
-1.3%
FY02 FY03 FY04
25th percentile
FY05 FY06
Median
FY07 FY08 FY09
75th percentile
Note: Total margin is the ratio of total income to total revenue.
Benchmark: Northeast US median FY08 = 0.9%
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 2

6%
5%
4%
3%
2%
1%
0%
-1%
-2%
2.1%
0.0%
1.8%
0.2%
2.9%
0.8%
3.5%
1.7%
-0.2%
3.4%
1.9%
0.1%
-1.7%
-3%
-4%
-2.7%
-2.4%
FY02 FY03 FY04
25th percentile
FY05 FY06
Median
3.4%
1.7%
0.1%
FY07
2.9%
0.7%
-1.1%
FY08
75th percentile
4.7%
1.9%
0.1%
FY09
Note: Operating margin is the ratio of operating income to total revenue.
Overall, operating margins have strengthened, with the median operating margin increasing to
1.9% in FY09 from
0.7% in FY08.
Fourteen hospitals
(22%) reported a loss from operations during
FY09.
Benchmark: Northeast US median FY08 = 0.9%
Benchmark Source: INGENIX
Consulting based on the hospital financial database used for the
2010 Almanac of Hospital
Financial and Operating Indicators,
INGENIX
Massachusetts Division of Health Care Finance and Policy - 3

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.
Massachusetts Division of Health Care Finance and Policy - 4

3.5%
3.0%
2.5%
2.0%
2.1%
2.5% 2.5%
3.2%
Similar to 2008, many hospitals continued to experience low nonoperating margins in
2009.
Twenty two hospitals
(34%) reported a nonoperating loss during
FY09.
1.6% 1.6%
1.5%
1.2%
1.3%
1.2%
1.0%
0.7%
0.9%
0.6%
0.5%
0.6%
1.1%
0.9%
0.5% 0.3%
0.2% 0.2%
0.4%
0.2%
0.0%
-0.5%
Benchmark: Northeast US median FY08 = 0.07%
-0.2%
FY02 FY03 FY04 FY05 FY06 FY07
-0.2%
FY08
-0.2%
FY09
Benchmark Source: INGENIX
Consulting based on the hospital financial database used for the
2010 Almanac of Hospital
Financial and Operating Indicators,
INGENIX
25th percentile Median 75th percentile
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.
Massachusetts Division of Health Care Finance and Policy - 5

2.5
2.0
2.02
1.94
1.5
1.62
1.51
2.11
1.60
2.11
1.0
1.08
1.13
1.03
1.94
2.07
1.53
1.14
1.42
1.16
1.55
1.12
1.85
1.99
1.45
1.15
1.50
1.19
0.5
A high current ratio indicates the ability to meet current liabilities and a lower probability of financial insolvency.
Massachusetts acute hospitals’ short term liquidity slightly improved with a median current ratio of
1.5 in FY09, up from
1.45 in FY08.
0.0
FY02 FY03 FY04
25th percentile
FY05 FY06
Median
FY07 FY08
75th percentile
Note: Current ratio is the ratio of current assets to current liabilities.
FY09
Benchmark: Northeast US median FY08 = 1.55
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 6

30
20
70
61
60
51
50
40
45
56
52
44
52
45
38
48
42
35
47
42
36
46
42
36
47
42
37
45
40
35
Days in accounts receivable measures the average number of days that patient receivables are outstanding, or the average collection period.
The median number of days taken to collect revenue shortened by two days in FY09 compared with FY08.
10
0
FY02 FY03 FY04
25th percentile
FY05 FY06
Median
FY07 FY08
75th percentile
FY09
Benchmark: Northeast US median FY08 = 46.2
Benchmark Source: 2010
Almanac of Hospital Financial and
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).
Massachusetts Division of Health Care Finance and Policy - 7

60
50
80
70
40
62
54
46
68
54
46
63
51
43
63
51
43
64
51
44
60
52
44
68
56
48
66
57
44
Average payment period measures the time it takes a hospital to pay current liabilities. High values indicate potential liquidity problems.
In FY09, the average payment period ranged from a low of
28 days to a high of
142 days, with the median being 57 days.
30
20
10
0
FY07 FY08
75th percentile
Benchmark: Northeast US median FY08 = 60.3
Benchmark Source: 2010
Almanac of Hospital Financial and
Operating Indicators, INGENIX FY02 FY03 FY04
25th percentile
FY05 FY06
Median
FY09
Note: Average payment period is the ratio of current liabilities less estimated third-party settlements to total expenses less depreciation and amortization/quarters of data x 91.25.
Massachusetts Division of Health Care Finance and Policy - 8

6
5
4
3
2
1
0
3.4
3.2
2.5
3.7
2.6
4.6
3.2
5.0
3.4
5.6
3.7
2.6
4.5
2.5
4.5
3
Debt service coverage measures the ability to meet principal and interest payments in the coming year.
Better coverage, as evidenced by a higher value, results in a better bond rating.
This ratio improved in
FY09 due to more positive financial performance across the industry.
2.0
1.7
1.9
2.0
1.7
1.2
1.3
1.2
FY02 FY03 FY04
25th percentile
FY05 FY06
Median
FY07 FY08
75th percentile
FY09
Benchmark: Northeast US median FY08 = 2.7
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Note: Debt service coverage is the ratio of total income plus interest expense plus depreciation and amortization to interest expense plus current portion of long-term debt.
Massachusetts Division of Health Care Finance and Policy - 9

30%
27.5%
28.0%
25%
25.0%
20%
15%
10%
5%
20.3% 20.4%
16.5%
18.1%
17.6%
18.2%
10.5%
11.4%
13.9%
12.3% 12.1%
13.5%
9.3%
7.6%
6.3%
24.6%
19.3%
20.4%
14.9%
7.7%
10.5%
0%
Cash flow to total debt indicates the potential for future financial problems or insolvency.
This ratio improved in
FY09 due to improving financial performance across the industry.
Benchmark: Northeast US median FY08 = 12.5%
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
FY02 FY03 FY04
25th percentile
FY05 FY06
Median
FY07 FY08
75th percentile
FY09
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.
Massachusetts Division of Health Care Finance and Policy - 10

70%
60%
50%
40%
30%
20%
10%
0%
61.1%
58.7%
60.9% 61.0% 61.0%
63.9%
58.0%
55.7%
48.8%
41.6% 41.9%
43.7%
42.7% 43.1% 43.2%
37.9%
33.3% 32.9%
26.2% 25.5%
26.9% 27.1%
28.2%
18.7%
FY02 FY03 FY04
25th percentile
FY05 FY06
Median
Note: Equity financing is the ratio of total net assets to total assets.
FY07 FY08
75th percentile
FY09
Equity financing measures the proportion of total assets financed with equity.
In FY09 acute hospitals’ equity financing declined, reflecting some hospitals’ declining position in net assets.
A number of hospitals experienced an actuarial reconciliation of pension related assets and obligations in FY09 which had a negative impact on net assets.
Benchmark: Northeast US median FY08 = 47.9%
Benchmark Source: 2010
Almanac of Hospital Financial and
Operating Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 11

• 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
Baystate Medical Center
Beth Israel Deaconess Medical Center
Boston Medical Center
Brigham and Women's Hospital
Cambridge Health Alliance
Caritas St. Elizabeth's Medical Center
Children's Hospital Boston
Dana-Farber Cancer Institute
Lahey Clinic
Massachusetts Eye and Ear Infirmary
Massachusetts General Hospital
Mount Auburn Hospital
Saint Vincent Hospital
Tufts Medical Center
UMass Memorial Medical Center
Community Hospitals
Anna Jaques Hospital
Athol Memorial Hospital
Baystate Franklin Medical Center
Baystate Mary Lane Hospital
Berkshire Medical Center
Beth Israel Deaconess Hospital-Needham
Cape Cod Hospital
Caritas Carney Hospital
Caritas Good Samaritan Medical Center
Caritas Holy Family Hospital
Caritas Norwood Hospital
Clinton Hospital
Cooley Dickinson Hospital
Emerson Hospital
Fairview Hospital
Falmouth Hospital
Faulkner Hospital
Hallmark Health
Harrington Memorial Hospital
Health Alliance Hospital
Heywood Hospital
Holyoke Medical Center
Hubbard Regional Hospital
Jordan Hospital
Lawrence General Hospital
Lowell General Hospital
Marlborough Hospital
Martha's Vineyard Hospital
Mercy Medical Center
Merrimack Valley Hospital
MetroWest Medical Center
Milford Regional Medical Center
Milton Hospital
Morton Hospital and Medical Center
Nantucket Cottage Hospital
Nashoba Valley Medical Center
New England Baptist Hospital
Newton-Wellesley Hospital
Noble Hospital
North Adams Regional Hospital
North Shore Medical Center
Northeast Hospital
Quincy Medical Center
Saint Anne's Hospital
Saints Medical Center
Signature Healthcare Brockton Hospital
South Shore Hospital
Southcoast Hospitals Group
Sturdy Memorial Hospital
Winchester Hospital
Wing Memorial Hospital and Medical Centers
Massachusetts Division of Health Care Finance and Policy - 12

Teaching vs. Community Hospitals
8%
7%
6%
5%
6.0%
4.9%
7.2%
5.1%
4%
3%
3.0%
2%
1.3%
1%
0%
0.3%
FY02
1.8%
1.2%
0.9%
FY03
1.6%
1.1%
FY04
Teaching
3.1%
2.5%
3.1%
2.8%
FY05 FY06
Community
3.0%
2.7%
FY07
3.9%
0.9%
0.8%
FY08
Statewide
2.2%
1.7%
FY09
Note: Total margin is the ratio of total income to total revenue.
Both teaching and community hospitals experienced increases in median total margin in FY09 compared with
FY08.
Teaching hospitals had higher profitability than community hospitals in each of the past eight years.
The median total margin was 5.1% for teaching hospitals compared with 1.7% for community hospitals in FY09.
Benchmark: Northeast US median FY08 = 0.9%
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 13

2.2%
Teaching vs. Community Hospitals, FY09
Teaching Hospitals
Median: 5.1%
8.4%
Community Hospitals
Median: 1.7%
7.3%
Overall
Median
The overall financial performance of acute hospitals varies widely by teaching status.
Three teaching hospitals (20%) reported losses in FY09 compared with five
(33%) in FY08. Ten community hospitals
(20%) reported losses in FY09 compared with eighteen (36%) in
FY08.
-6.96%
-15.1%
Note: Total margin is the ratio of total income to total revenue.
Benchmark: Northeast US median FY08 = 0.9%
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 14

Teaching vs. Community Hospitals
5.0%
5%
4%
3%
2.8%
3.2% 3.1%
4.1%
The median operating margin improved for community hospitals and teaching hospitals in FY09 compared with FY08.
The median operating margin for teaching hospitals was significantly higher in
FY09 than it was for community hospitals in FY08 (5% vs.
1.5%).
2%
1%
0%
1.2%
0.0%
FY02
1.0%
0.2%
2.0%
0.8%
0.0%
FY03
0.1%
FY04
Teaching
1.7%
1.1%
FY05
1.9%
1.8%
FY06
Community
1.7%
1.4%
0.7%
0.4%
FY07 FY08
Statewide
Note: Operating margin is the ratio of operating income to total revenue.
1.9%
1.5%
FY09
Benchmark: Northeast US median FY08 = 0.9%
Benchmark Source: 2010
Almanac of Hospital Financial and
Operating Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 15

Teaching vs. Community Hospitals, FY09
Teaching Hospitals
Median: 5.0%
8.4%
Community Hospitals
Median: 1.5%
8.4%
1.9%
Overall
Median
Operating margin performance varied widely by teaching status in FY09.
Five teaching hospitals
(33%) and nine community hospitals
(18%) reported operating losses in
FY09.
-8.1%
-18.5%
Note: Operating margin is the ratio of operating income to total revenue.
Benchmark: Northeast US median FY08 = 0.9%
Benchmark Source: 2010
Almanac of Hospital Financial and
Operating Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 16

Teaching vs. Community Hospitals
5%
4%
4.6%
3%
2%
1%
0.6%
0%
0.3%
0.2%
1.0%
0.7%
0.6%
1.7%
0.9%
0.8%
2.5%
1.3%
1.1%
1.9%
1.6%
1.2%
1.1%
1.4%
-1%
FY02 FY03 FY04
Teaching
FY05 FY06
Community
FY07 FY08
Statewide
Note: Non-operating margin is the ratio of non-operating income to total revenue.
1.0%
0.5%
0.4%
0.2%
-0.1%
0.2%
FY09
Teaching hospitals experienced an improvement in their median non-operating margin in FY09 compared with FY08.
Community hospitals’ median non-operating margin, however, continued to decline.
The median nonoperating margin was slightly higher for teaching hospitals compared with community hospitals in FY09 (1% and
0.2%).
Benchmark: Northeast US median FY08 = 0.07%
Benchmark Source: INGENIX
Consulting based on the hospital financial database used for the
2010 Almanac of Hospital
Financial and Operating
Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 17

Teaching vs. Community Hospitals, FY09
Teaching Hospitals
Median: 1.0%
5.4%
Community Hospitals
Median: 0.2%
Four teaching hospitals
(27%) and nineteen community hospitals
(39%) reported nonoperating losses in
FY09.
3.4%
0.2%
-1.1%
Overall
Median
Benchmark: Northeast US median FY08 = 0.07%
Benchmark Source: INGENIX
Consulting based on the hospital financial database used for the
2010 Almanac of Hospital
Financial and Operating Indicators,
INGENIX
-8.3%
Note: Non-operating margin is the ratio of non-operating income to total revenue.
Massachusetts Division of Health Care Finance and Policy - 18

Teaching vs. Community Hospitals
1.90
1.82
1.80
1.72
1.70
1.62
1.60
1.50
1.54
1.51
1.60
1.61
1.53
1.58
1.55
1.49
1.50
1.50
1.44
1.42
1.46
1.45
1.44
1.49
1.40
1.39
1.36
1.30
FY02 FY03 FY04
Teaching
FY05 FY06
Community
Note: Current ratio is the ratio of current assets to current liabilities.
FY07 FY08
Statewide
FY09
Current ratios for teaching and community hospitals have varied over time.
However, in FY09 the median current ratio improved among teaching and community hospitals.
Benchmark: Northeast US median FY08 = 1.55
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 19

Teaching vs. Community Hospitals
53
51
49
47
45
43
41
39
37
35
53
52
46
In FY09 teaching hospitals took about four days longer than community hospitals to collect revenue.
45
44
42 42 42
43
42
41
40 40 40
39
36
FY05
Benchmark: Northeast US median FY08 = 46.2
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX FY02 FY03 FY04 FY06 FY07 FY08 FY09
Teaching Community Statewide
Note: Days in accounts receivable is the ratio of net patient accounts receivable to net patient service revenue/(quarters of data x 91.25).
Massachusetts Division of Health Care Finance and Policy - 20

Teaching vs. Community Hospitals
59
58
57
56
55
54
53
52
51
50
49
57
58
57
In FY09, community hospitals took roughly three days longer than teaching hospitals to pay their bills (58 and
55 days, respectively).
56 56
55 55 55
54
53
52 52
51 51 51
50 49
FY05 FY06
Community
FY07 FY08
Statewide
Benchmark: Northeast US median FY08 = 60.3
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX FY02 FY03 FY04
Teaching
FY09
Note: Average payment period is the ratio of current liabilities less estimated third-party settlements to total expenses less depreciation and amortization/quarters of data x 91.25.
Massachusetts Division of Health Care Finance and Policy - 21

Teaching vs. Community Hospitals
4.5
4.0
3.5
3.0
4.2
3.2
3.4
4.3
3.7
3.2
3.3
3.9
Teaching hospitals were better able to meet principal and interest payments than community hospitals in
FY09.
However, the median debt service coverage ratio improved for both teaching and community hospitals in
FY09 compared to
FY08.
2.7
2.6
2.6
3.0
2.9
2.5
2.5
2.5
2.4
2.4
2.0
2.0
1.9
1.5
FY02 FY03 FY04
Teaching
FY05 FY06
Community
FY07 FY08
Statewide
FY09
Benchmark: Northeast US median FY08 = 2.7
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Note: Debt service coverage is the ratio of total income plus interest expense plus depreciation and amortization to interest expense plus current portion of long-term debt.
Massachusetts Division of Health Care Finance and Policy - 22

Teaching vs. Community Hospitals
25%
20%
18.1%
15%
10%
13.1%
12.4%
10.5%
11.4%
11.1%
9.8%
13.9%
13.0%
22.2%
20.5%
20.6%
20.5%
17.6%
18.2%
17.4%
17.8%
19.0%
21.6%
20.5%
16.4%
18.8%
14.9%
14.8%
Cash flow to total debt ratios show similar trends by teaching status. Both teaching and community hospitals experienced increases in this metric in FY09.
The lower this ratio, the more likely a hospital will find it difficult to meet current and long term financing needs.
5%
0%
FY02 FY03 FY04
Teaching
FY05 FY06
Community
FY07 FY08
Statewide
FY09
Benchmark: Northeast US median FY08 = 12.5%
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
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.
Massachusetts Division of Health Care Finance and Policy - 23

Teaching vs. Community Hospitals
54.7%
55%
50%
47.4%
48.7%
45.9%
48.9%
48.3%
45%
40%
42.3%
41.6%
42.4%
41.9%
40.5%
43.7%
43.1%
42.7%
40.4%
43.1%
43.0%
43.4%
43.2%
40.3%
42.4%
37.9%
35%
34.8%
Teaching hospitals currently have greater equity financing than community hospitals, although the median equity financing ratio declined for both teaching and community hospitals in
FY09.
A number of hospitals experienced an actuarial reconciliation of pension related assets and obligations in FY09 which had a negative impact on net assets.
30%
FY02 FY03 FY04
Teaching
FY05 FY06
Community
Note: Equity financing is the ratio of total net assets to total assets.
FY07 FY08
Statewide
FY09
Benchmark: Northeast US median FY08 = 47.9%
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 24

• 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
Berkshire Medical Center
Boston Medical Center
Cambridge Health Alliance
Cape Cod Hospital
Caritas Carney Hospital
Caritas Good Samaritan Medical Center
Caritas St. Elizabeth's Medical Center
Clinton Hospital
Holyoke Medical Center
Lawrence General Hospital
Mercy Medical Center
Merrimack Valley Hospital
North Adams Regional Hospital
Quincy Medical Center
Saint Anne’s Hospital
Saints Medical Center
Signature Healthcare Brockton Hospital
Southcoast Hospitals Group
All Other Hospitals
Anna Jaques Hospital
Athol Memorial Hospital
Baystate Franklin Medical Center
Baystate Mary Lane Hospital
Baystate Medical Center
Beth Israel Deaconess Medical Center
Beth Israel Deaconess Hospital-Needham
Brigham and Women's Hospital
Caritas Holy Family Hospital
Caritas Norwood Hospital
Children's Hospital Boston
Cooley Dickinson Hospital
Dana-Farber Cancer Institute
Emerson Hospital
Fairview Hospital
Falmouth Hospital
Faulkner Hospital
Hallmark Health
Harrington Memorial Hospital
HealthAlliance Hospital
Heywood Hospital
Hubbard Regional Hospital
Jordan Hospital
Lahey Clinic
Lowell General Hospital
Marlborough Hospital
Martha's Vineyard Hospital
Massachusetts Eye and Ear Infirmary
Massachusetts General Hospital
MetroWest Medical Center
Milford Regional Medical Center
Milton Hospital
Morton Hospital and Medical Center
Mount Auburn Hospital
Nantucket Cottage Hospital
Nashoba Valley Medical Center
New England Baptist Hospital
Newton-Wellesley Hospital
Noble Hospital
North Shore Medical Center
Northeast Hospital
South Shore Hospital
Saint Vincent Hospital
Sturdy Memorial Hospital
Tufts Medical Center
UMass Memorial Medical Center
Winchester Hospital
Wing Memorial Hospital and Medical Centers
Massachusetts Division of Health Care Finance and Policy - 25

Disproportionate Share vs. All Other Hospitals
5%
4.2%
4%
3.6%
3%
2%
1%
0%
0.4%
0.3%
0.2%
FY02
-1%
1.3%
1.2%
FY03
1.9%
1.6%
0.7%
FY04
3.1%
0.8%
FY05
3.3%
3.1%
2.5%
3.0%
2.7%
FY06 FY07
DSH All Other
Note: Total margin is the ratio of total income to total revenue.
Statewide
1.0%
0.9%
FY08
-0.4%
2.5%
2.2%
1.1%
FY09
Disproportionate share hospitals generally have lower total profitability than other hospitals.
Median total profits for all hospitals increased in FY09. However, disproportionate share hospitals’ median total margin is lower than all other hospitals in
FY09 (1.1% and
2.5%).
Benchmark: Northeast US median FY08 = 0.9%
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 26

Disproportionate Share vs. All Other Hospitals
3%
2%
1.9%
2.3%
1.9%
2.3%
1.7% 1.7%
1.1%
1%
0.5%
0.6%
0%
0.0%
FY02
-0.4%
0.2%
0.0%
FY03
-1%
0.8%
FY04
-0.5%
DSH
0.4%
FY05
0.5%
FY06
All Other
0.3%
FY07
Statewide
Note: Operating margin is the ratio of operating income to total revenue.
FY08
2.2%
1.9%
1.3%
FY09
Historically, disproportionate share hospitals tend to be less profitable from operations than other hospitals.
Median operating margin improved for all hospitals in FY09 compared with FY08, but more sharply for all other hospitals than for disproportionate share hospitals.
Benchmark: Northeast US median FY08 = 0.9%
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 27

Disproportionate Share vs. All Other Hospitals
2.0%
1.8%
1.6%
1.5%
1.0%
0.5%
0.0%
0.8%
0.7%
1.0%
0.9%
1.3% 1.3%
0.9%
1.2%
1.1%
0.5% 0.7%
0.3%
0.1%
FY02
0.3%
FY03 FY04
DSH
FY05 FY06
All Other
FY07
Statewide
Note: Non-operating margin is the ratio of non-operating income to total revenue.
0.5%
0.4%
0.2%
FY08
0.2%
0.1%
FY09
Non-operating profits continued to decline for many hospitals in
FY09 due in large part to the economic climate.
Benchmark: Northeast US median FY08 = 0.07%
Benchmark Source: INGENIX
Consulting based on the hospital financial database used for the
2010 Almanac of Hospital
Financial and Operating Indicators,
INGENIX
Massachusetts Division of Health Care Finance and Policy - 28

Disproportionate Share vs. All Other Hospitals
1.8
1.7
1.69
1.6
1.62
1.5
1.54
1.62
1.67
1.60
1.69
1.59
1.62
Disproportionate share hospitals’ ability to pay current bills is not as strong as that of other hospitals.
Their median current ratio of 1.33 in FY09 was lower than the statewide median of
1.5.
1.51
1.53
1.47
1.55
1.50
1.48
1.50
1.4
1.45
1.42
1.3
1.33
1.34
1.33
1.33
1.30
1.28
1.2
1.1
FY02 FY03 FY04 FY05 FY06 FY07
DSH All Other Statewide
Note: Current ratio is the ratio of current assets to current liabilities.
FY08 FY09
Benchmark: Northeast US median FY08 = 1.55
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 29

Disproportionate Share vs. All Other Hospitals
54
52
50
48
46
44
42
40
38
36
52
51
52
Disproportionate share hospitals took about the same number of days to collect their accounts receivables as all other hospitals in
FY09.
48
46 45
43
44
42 42 42 42
40
40
38
39
FY05 FY06
All Other
38
37
FY07
Statewide
FY08
Benchmark: Northeast US median FY08 = 46.2
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
FY02 FY03 FY04
DSH
FY09
Note: Days in accounts receivable is the ratio of net patient accounts receivable to net patient service revenue/(quarters of data x 91.25).
Massachusetts Division of Health Care Finance and Policy - 30

Disproportionate Share vs. All Other Hospitals
59
57
63
61
55
56 56
57
59
58
61
56
60
57
Historically, disproportionate share hospitals have taken longer to pay bills than other hospitals.
In FY09, disproportionate share hospitals took about six days longer to pay their bills than all other hospitals.
53
51
54
53
54
53
54
52
54 54
51 51 51
49
47
FY02 FY03
48
FY04
DSH
49
FY05
49
FY06
All Other
FY07
Statewide
FY08 FY09
Benchmark: Northeast US median FY08 = 60.3
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Note: Average payment period is the ratio of current liabilities less estimated third-party settlements to total expenses less depreciation and amortization/quarters of data x 91.25.
Massachusetts Division of Health Care Finance and Policy - 31

Disproportionate Share vs. All Other Hospitals
4.5
4.0
3.5
3.0
2.6
2.6
3.7
3.2
3.9
3.4
4.2
3.7
3.2
2.8
3.5
3
All hospitals on average show an improvement in meeting current debt obligations in FY09 compared with FY08.
However, in general, disproportionate share hospitals have a more difficult time meeting debt obligations than do all other hospitals.
2.5
2.3
2.0
2.0
1.5
1.0
2.5
2.2
2.6
2.5
1.9
2.0
1.9
1.7
FY02 FY03 FY04
DSH
FY05 FY06
All Other
FY07
Statewide
1.5
FY08 FY09
Benchmark: Northeast US median FY08 = 2.7
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Note: Debt service coverage is the ratio of total income plus interest expense plus depreciation and amortization to interest expense plus current portion of long-term debt.
Massachusetts Division of Health Care Finance and Policy - 32

Disproportionate Share vs. All Other Hospitals
22%
20%
18%
16%
14%
12%
10%
8%
6%
19.7%
17.6%
20.3%
20.7%
20.5%
19.0%
18.2%
20.5%
19.5%
All hospitals’ cash flow to total debt ratio improved in FY09 from
FY08, signaling less difficulty meeting debt obligations.
16.0%
15.8%
14.9%
13.1%
12.9%
13.9%
13.6%
11.4%
10.5% 11.4% 12.3%
9.9%
8.3%
FY05 FY06
All Other
8.4%
FY07
Statewide
FY08
Benchmark: Northeast US median FY08 = 12.5%
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
FY02 FY03 FY04
DSH
FY09
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.
Massachusetts Division of Health Care Finance and Policy - 33

Disproportionate Share vs. All Other Hospitals
55%
53.4%
50%
48.4%
49.4%
48.2%
45%
40%
43.9%
44.5%
41.6%
41.9%
43.7%
42.7%
43.1%
48.9%
35%
35.5% 35.6%
36.5%
47.5%
43.2%
39.6%
37.7%
38.7%
37.9%
36.3%
33.9%
33.3%
30%
FY02 FY03 FY04
DSH
FY05 FY06
All Other
Note: Equity financing is the ratio of total net assets to total assets.
FY07 FY08
Statewide
FY09
The median equity financing ratio decreased for all hospitals in FY09 compared with FY08.
A number of hospitals experienced an actuarial reconciliation of pension related assets and obligations in FY09 which had a negative impact on net assets.
Benchmark: Northeast US median FY08 = 47.9%
Benchmark Source: 2010 Almanac of Hospital Financial and Operating
Indicators, INGENIX
Massachusetts Division of Health Care Finance and Policy - 34

FY09
Hospitals
Teaching
Baystate Medical Center
Beth Israel Deaconess Medical Center
Boston Medical Center*
Brigham and Women's Hospital
Cambridge Health Alliance*
Caritas St. Elizabeth's Medical Center*
Children's Hospital Boston
Dana-Farber Cancer Institute
Lahey Clinic
Massachusetts Eye and Ear Infirmary
Massachusetts General Hospital
Mount Auburn Hospital
Saint Vincent Hospital
Tufts Medical Center
UMass Memorial Medical Center
Community
Anna Jaques Hospital
Athol Memorial Hospital
Baystate Franklin Medical Center
Baystate Mary Lane Hospital
Berkshire Medical Center*
Beth Israel Deaconess Hospital-Needham
Cape Cod Hospital*
Caritas Carney Hospital*
Caritas Good Samaritan Medical Center*
Caritas Holy Family Hospital
Caritas Norwood Hospital
Clinton Hospital*
Cooley Dickinson Hospital
Emerson Hospital
Fairview Hospital
Falmouth Hospital
Faulkner Hospital
Hallmark Health
Operating
Margin
2.55%
-6.03%
-0.01%
0.62%
0.17%
3.36%
2.30%
4.29%
6.42%
4.09%
2.17%
1.33%
4.68%
0.55%
2.05%
5.90%
1.54%
4.81%
7.17%
0.47%
-2.53%
5.03%
-8.13%
6.10%
5.58%
-5.30%
4.60%
-0.48%
4.97%
5.67%
8.41%
-1.04%
4.97%
Non-
Operating
Margin
-0.30%
1.61%
1.41%
0.03%
1.17%
-0.25%
1.19%
5.39%
0.99%
3.46%
0.00%
1.02%
-0.01%
-1.14%
0.34%
-0.06%
0.19%
0.69%
2.50%
-0.55%
0.33%
0.56%
0.45%
0.17%
0.00%
0.26%
1.50%
0.40%
-0.28%
-0.37%
0.85%
0.24%
1.39%
Total
Margin
2.49%
-5.84%
0.68%
3.12%
-0.38%
3.69%
2.86%
4.75%
6.58%
4.09%
2.43%
2.83%
5.08%
0.28%
1.68%
6.76%
1.78%
6.20%
6.86%
2.07%
-1.13%
5.06%
-6.96%
5.85%
6.78%
0.09%
5.63%
2.98%
4.97%
6.68%
8.41%
-2.18%
5.31%
Profit (Loss)
$59,557,000
$26,070,000
($11,329,000)
$105,500,000
($36,959,136)
$22,335,669
$88,388,000
$734,917
$49,315,126
$6,622,712
$131,887,000
$19,617,000
$26,792,304
($13,250,000)
$70,615,377
$2,663,837
($1,314,156)
$574,000
$1,042,000
($1,242,388)
$1,795,560
$10,710,633
$5,701,001
$12,990,838
$6,016,157
$3,892,833
$743,000
$8,534,929
$494,413
$655,585
$9,589,738
$3,215,000
$17,151,000
Hospitals
Community
Harrington Memorial Hospital
Health Alliance Hospital
Heywood Hospital
Holyoke Medical Center*
Hubbard Regional Hospital
Jordan Hospital
Lawrence General Hospital*
Lowell General Hospital
Marlborough Hospital
Martha's Vineyard Hospital
Mercy Medical Center*
Merrimack Valley Hospital*
MetroWest Medical Center
Milford Regional Medical Center
Milton Hospital
Morton Hospital and Medical Center
Nantucket Cottage Hospital
Nashoba Valley Medical Center
New England Baptist Hospital
Newton-Wellesley Hospital
Noble Hospital
North Adams Regional Hospital*
North Shore Medical Center
Northeast Hospital
Quincy Medical Center*
Saint Anne's Hospital*
Saints Medical Center*
Signature Healthcare Brockton Hospital*
South Shore Hospital
Southcoast Hospitals Group*
Sturdy Memorial Hospital
Winchester Hospital
Wing Memorial Hospital
*Denotes Disproportionate Share Hospital.
Operating
Margin
Non-
Operating
Margin
-0.57%
0.30%
-0.66%
0.06%
-2.32%
-4.03%
4.88%
-0.04%
3.87%
-18.50%
1.35%
0.61%
3.86%
-1.66%
-0.68%
1.35%
1.70%
-1.47%
6.36%
0.09%
2.11%
3.00%
2.96%
8.39%
4.00%
0.04%
3.55%
4.71%
1.11%
0.56% closed
1.00%
1.29%
2.77%
1.50%
0.95%
0.44%
0.04%
-1.15%
0.88%
2.09%
0.00%
0.15%
0.26%
-2.27%
0.32%
3.39%
0.00%
2.61%
0.05%
0.14%
-4.53%
0.15%
-0.98%
-0.13%
0.99%
0.49%
-1.01%
-4.42%
-0.96%
-8.33%
-0.08%
0.59%
Total
Margin
2.98%
5.01%
0.45%
0.62%
1.44%
1.33%
1.62%
2.38%
3.04%
-2.32%
-3.88%
5.15%
-2.32%
4.19%
-15.10%
1.35%
3.22%
3.91%
-1.52%
-5.21%
1.50%
0.72%
-1.60%
7.35%
0.58%
1.10%
-1.42%
2.00%
0.06%
3.92%
0.62%
Profit (Loss)
2,577,772
8,361,742
403,756
732,174
2,694,255
2,295,000
3,484,314
1,600,000
1,494,444
-1,296,298
-9,615,651
9,634,717
-1,509,891
5,501,692
-5,005,000
604,163
6,043,000
14,088,000
-844,131
-3,085,733
6,613,000
2,295,347
-1,760,117
10,627,070
783,000
2,229,682
-5,458,354
12,308,413
81,575
10,005,952
440,000
Notes: Mercy Hospital has a 12/31 year end and data for Mercy were not yet available at the time this analysis was completed.
Massachusetts Division of Health Care Finance and Policy - 35

FY08
Hospitals
Teaching
Baystate Medical Center
Beth Israel Deaconess Medical Center
Boston Medical Center*
Brigham and Women's Hospital
Cambridge Health Alliance*
Caritas St. Elizabeth's Medical Center*
Children's Hospital Boston
Dana-Farber Cancer Institute
Lahey Clinic
Massachusetts Eye and Ear Infirmary
Massachusetts General Hospital
Mount Auburn Hospital
Saint Vincent Hospital
Tufts Medical Center
UMass Memorial Medical Center
Community
Anna Jaques Hospital
Athol Memorial Hospital
Baystate Franklin Medical Center
Baystate Mary Lane Hospital
Berkshire Medical Center*
Beth Israel Deaconess Hospital-Needham
Cape Cod Hospital*
Caritas Carney Hospital*
Caritas Good Samaritan Medical Center*
Caritas Holy Family Hospital
Caritas Norwood Hospital
Clinton Hospital*
Cooley Dickinson Hospital
Emerson Hospital
Fairview Hospital
Falmouth Hospital
Faulkner Hospital
Hallmark Health
Operating
Margin
5.48%
2.46%
6.44%
5.15%
-6.77%
1.83%
4.07%
-5.58%
3.83%
-9.42%
4.62%
5.09%
7.44%
-1.14%
4.08%
0.73%
0.68%
-2.48%
-1.04%
2.14%
1.39%
-4.05%
0.70%
0.00%
1.31%
-2.50%
1.01%
2.33%
-2.53%
3.55%
-3.09%
-0.28%
0.44%
Non-
Operating
Margin
0.86%
0.77%
-1.27%
-0.13%
1.25%
-2.24%
1.26%
-1.69%
-0.07%
7.04%
-0.31%
-1.20%
-0.01%
-1.39%
0.19%
0.12%
0.45%
1.04%
2.03%
1.54%
0.40%
0.88%
0.44%
0.00%
0.00%
-1.37%
1.96%
0.81%
1.06%
0.95%
3.89%
0.55%
0.47%
Total
Margin
6.34%
3.23%
5.17%
5.03%
-5.51%
-0.41%
5.33%
-7.27%
3.76%
-2.37%
4.31%
3.89%
7.42%
-2.53%
4.27%
0.85%
1.12%
-1.43%
0.99%
3.68%
1.79%
-3.17%
1.14%
0.00%
1.31%
-3.87%
2.97%
3.13%
-1.47%
4.50%
0.80%
0.27%
0.91%
Profit (Loss)
$53,334,000
$39,328,000
$54,986,048
$95,721,000
($29,448,181)
($1,483,929)
$63,381,000
($49,469,327)
$30,111,095
($3,589,528)
$106,649,000
$10,501,964
$22,196,757
($14,673,000)
$53,129,554
$850,914
$257,812
($1,180,000)
$321,000
$11,957,432
$818,552
($11,362,263)
$1,334,649
$8,417
$1,976,575
($5,814,182)
$785,447
$5,101,153
($2,448,065)
$1,592,437
$1,099,294
$471,000
$2,450,000
Hospitals
Community
Harrington Memorial Hospital
Health Alliance Hospital
Heywood Hospital
Holyoke Medical Center*
Hubbard Regional Hospital
Jordan Hospital
Lawrence General Hospital*
Lowell General Hospital
Marlborough Hospital
Martha's Vineyard Hospital
Mercy Medical Center*
Merrimack Valley Hospital*
MetroWest Medical Center
Milford Regional Medical Center
Milton Hospital
Morton Hospital and Medical Center
Nantucket Cottage Hospital
Nashoba Valley Medical Center
New England Baptist Hospital
Newton-Wellesley Hospital
Noble Hospital
North Adams Regional Hospital*
North Shore Medical Center
Northeast Hospital
Quincy Medical Center*
Saint Anne's Hospital*
Saints Medical Center*
Signature Healthcare Brockton Hospital*
South Shore Hospital
Southcoast Hospitals Group*
Sturdy Memorial Hospital
Winchester Hospital
Wing Memorial Hospital
*Denotes Disproportionate Share Hospital.
Operating
Margin
Non-
Operating
Margin
3.82%
-0.79%
1.41%
0.21%
-0.32%
0.50%
0.87%
-0.18%
0.68%
3.49% n/a
0.00%
0.21%
2.04%
1.77%
3.79%
6.56%
0.00%
2.71%
0.94%
0.32%
1.26%
0.21%
-3.01%
-0.21%
-4.51%
-1.37%
0.55%
-1.65%
-1.22%
-2.23%
0.23%
0.60%
-3.34%
5.45%
-0.60%
-0.99%
-8.19%
-0.90%
1.64%
1.22%
-0.61%
2.20% n/a
-6.01%
-3.62%
3.39%
-4.64%
0.36%
-8.13%
-0.96%
0.96%
2.87%
-0.86%
5.48%
0.44%
1.71%
-2.33%
3.71%
-1.12%
-3.18%
1.86%
2.58%
8.49%
2.89%
0.50%
Total
Margin
0.48%
4.66%
0.81%
-0.78%
-8.51%
-0.40%
2.51%
1.04%
0.08%
5.69% n/a
-6.01%
-3.41%
5.43%
-2.87%
4.14%
-1.57%
-0.96%
3.68%
3.81%
-0.55%
6.75%
0.64%
-1.30%
-2.54%
-0.81%
-2.49%
-2.63%
0.20%
1.36%
6.26%
3.12%
1.10%
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.
Massachusetts Division of Health Care Finance and Policy - 36
Profit (Loss)
$364,687
$7,377,665
$720,349
($951,615)
($1,874,597)
($728,020)
$4,120,000
$1,966,929
$49,977
$2,647,444 n/a
($3,275,192)
($8,116,041)
$9,542,160
($1,750,890)
$5,328,626
($527,000)
($427,612)
$6,587,000
$12,870,000
($294,163)
$4,334,579
$2,813,000
($3,843,899)
($2,677,752)
($1,077,037)
($3,281,000)
($5,158,093)
$716,924
$8,129,570
$9,230,619
$7,583,429
$702,734

• 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.
Massachusetts Division of Health Care Finance and Policy - 37

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