At the onset of the COVID-19 pandemic, a primary focus for healthcare systems was ensuring adequate liquidity. This was necessary to navigate a sudden change in operating environments, as stay at-home orders and a suspension of elective procedures created financial stress across the whole healthcare landscape. As the pandemic progressed, liquidity support arrived in the form of CARES Act assistance and CMS advance payments (as well as from other sources).
At this point, the focus shifted onto where to park those funds, with recognition being given to the temporary nature of many of these resources. Naturally, this led some systems to examine how many operating investment pools they utilize to balance short-term liquidity needs with long-term investment growth. This serves as a reminder for all such systems to periodically reassess the suitability of their approach.
In this paper, we outline key observations on how our health system clients structure their operating pools. We also set out key considerations that they can take into account to evaluate their own unique needs and circumstances. The paper is based on Mercer’s “2020 Healthcare Study.” This is an annual collection of detailed investment- and operations-related information from healthcare providers nationally. It gathered data on more than 60 hospital and health systems and their operating investment pools. Our analysis focused on the following aspects:
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