2017 CSHO Study of Healthcare Organizations Released

September 11, 2018  | by Commonfund Institute

Industry Knowledge

Organizations Participating in Commonfund Benchmarks Study® of Nonprofit Healthcare Organizations Report Mixed Long-Term Results

13.2% Investment Return for 2017 Is Highest for Healthcare Organizations Since 2013

New York, NY, September 11, 2018 – The 56 nonprofit healthcare organizations participating in the the 2016-2017 Commonfund Benchmarks Study® Healthcare Organizations Report reported a return on investable assets of 13.2 percent for 2017, the highest return since 13.3 percent reported for 2013. For 2016, which was also included in the Study, participating organizations’ return on investable assets was 6.2 percent.

Returns for both 2016 and 2017 were higher than those reported by healthcare organizations participating in the previous Study, conducted for 2014 and 2015. Returns for those years were 4.4 percent for 2014 and -1.6 percent for 2015.

All returns in the Study are reported net of fees. Study data address the 2016 and 2017 calendar years, which coincide with participating organizations’ fiscal years (beginning January 1 and ending December 31). “Investable assets” include endowment/foundation funds, funded depreciation, working capital and other separately treated assets.

The double-digit gains reported for 2017 benefited healthcare organizations by improving mission-critical long-term results. For the trailing three-, five- and 10-year periods, reported average annual returns on investable assets were 5.9 percent, 6.9 percent and 4.6 percent, respectively, for 2017. For 2016, comparable returns were lower, at 3.1 percent, 6.5 percent and 4.2 percent, respectively.

“In a challenging environment, healthcare organizations and systems that can make strategic financial commitments to infrastructure, technology and expanded provider networks should be able to prevail. The investable asset pool is a key resource in this regard, and Commonfund is pleased to see the strong return registered for 2017,” said Cathleen Rittereiser, Executive Director of Commonfund Institute, which conducted the Study. “The concern, however, is a shortfall in long-term returns. Healthcare organizations confront a difficult balancing act: maintaining a large enough allocation to fixed income investments to satisfy bond rating agencies’ emphasis on balance sheet liquidity but not so large that these low-yielding fixed income investments weaken the portfolio’s ability to grow and meet future needs,” Ms. Rittereiser continued.

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