Non-Profit Health Care - Time for a Financial Wellness Check

Non-profit health care organizations are experiencing increased pressures in multiple areas, including strengthening the balance sheet, optimizing resource allocation, executing the broader organization’s strategy, and delivering on mission. With so many moving parts—from payment to policy uncertainties to idiosyncratic risks for each organization—now may be a good time to conduct a financial wellness checkup. Specifically, the board-designated asset pools1 can be a source of risk and opportunity, and it is important to know where limitations or opportunities may exist.

The following table2 highlights several key industry trends, which can have short-term and intermediate-term impact on the balance sheet, the financial metrics, and the credit rating. How each organization is affected will depend on its operating environment as well as its ability and capacity to manage the trade-offs.

Organizations need to assess where they currently are, where there is flexibility, and where there are risks. Just as with a broader organization’s enterprise risk management team, the investment committees should identify, assess, measure, monitor, and plan for risks and opportunities related to the investment asset pools.

The board-designated asset pools can be a source of risk and opportunity, and it is important to know where limitations or opportunities may exist.


1 Including short-term and long-term operating assets, funded depreciation, and other unrestricted reserves.
2 The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Information contained herein is for informational purposes only and should not be considered investment advice.

3 Based on calendar-year 2016 PBGC filings for single employer pension plans covered by the PBGC.
4 For further details, see Aon Hewitt’s white paper “Managing Health Care Reserves: AligningOperating Assets with Broader Organizational Goals.”


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© Aon plc 2019. All rights reserved.
Investment advice and consulting services provided by Aon Hewitt Investment Consulting, Inc. (“AHIC”). The information contained herein is given as of the date hereof and does not purport to give information as of any other date. The delivery at any time shall not, under any circumstances, create any implication that there has been a change in the information set forth herein since the date hereof or any obligation to update or provide amendments hereto.

This document is not intended to provide, and shall not be relied upon for, accounting, legal or tax advice or investment recommendations. Any accounting, legal, or taxation position described in this presentation is a general statement and shall only be used as a guide. It does not constitute accounting, legal, and tax advice and is based on AHIC’s understanding of current laws and interpretation.

This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The comments in this summary are based upon AHIC’s preliminary analysis of publicly available information. The content of this document is made available on an “as is” basis, without warranty of any kind. AHIC disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. AHIC reserves all rights to the content of this document. No part of this document may be reproduced, stored, or transmitted by any means without the express written consent of AHIC.

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