As a follow-up to Tuesday’s (Dec 10) post, we presented an opportunity many hospitals have available through a strategic approach to managing the balance sheet financial assets. Hospitals continually search for ways to strengthen their financial foundation. To recap, a recent analysis of 37 Minnesota hospitals has uncovered a significant opportunity many institutions overlook: again - through a more strategic utilization of their investment portfolios.

These 37 hospitals collectively manage nearly $1 billion ($933.5M) in investable assets, yet currently generate only $13.9 million in annual investment income—a return of just 1.49%. With current treasury rates between 4-5%, even a conservative treasury strategy could generate between $37.3 million and $46.7 million annually—an additional $23.4M to $32.8M over current returns. This represents an additional $632,000 to $886,000 per hospital, achievable through low-risk treasury management. To put this in perspective, even at the conservative 4% return level, the additional $23.4M in annual income could fund 195 new nursing positions across these institutions. Moving to a balanced portfolio approach targeting 7% returns would generate $65.3 million annually, providing an additional $51.4M system-wide or $1.4M per hospital through a thoughtfully diversified investment strategy.

Hospitals have traditionally focused on operational revenue for much of their ability to reinvest in the resources needed to care for a community—the day-to-day revenue (and income) from patient care, procedures, and reimbursements. But beneath these obvious revenue streams lies a potentially transformative opportunity that many healthcare institutions overlook: the strategic management of their investable assets.

A recent study of 37 Minnesota hospitals reveals a striking picture of this untapped potential. These institutions collectively manage nearly $1 billion in investable assets. Yet, their cautious investment approaches may leave significant value on the table—value that could be reinvested in patient care, staff development, and crucial infrastructure improvements.