Annual Healthcare Peer Risk Study

Hospitals and health systems in a new regime

Key findings


Right-sizing liquidity

On average, cash balances increased in 2020 as organizations prepared for the uncertainty surrounding COVID-19 and received federal stimulus. Looking at 2021, cash balances have decreased slightly as organizations work to optimize liquidity buffers and strategically deploy assets across high returning fixed income and private markets.


Deconstructing risk

50-60% allocations to equity and alternatives drives nearly all the risk for most hospital portfolios. Fixed income (which contributes interest rate and spread risk) was well represented, but providing very little downside protection.


Grace under pressure

The risk appetite of a lot of health systems is currently being tested, as seen with not-so-hypothetical drawdowns to days cash on hand. Debt covenant breaches are the near-term concern for some, and balance sheets may be challenged by both prolonged market and operating pressures.

Insights from BlackRock’s annual Healthcare Peer Risk Study

Quick Convos – Healthcare Peer Risk Insights

Calvin: Hi Anne Marie – I have a question about Healthcare investing, could we catch up over coffee?

Anne Marie:  Absolutely  

Calvin: I hear you just launched your fiscal year 2021 peer risk study for healthcare balance sheets.  Can you give me a quick overview of what it is?  

Anne Marie:  Sure Calvin!  I actually have a recent presentation with me, let me pull it up

Our peer risk study aims to spark dialog around how hospital systems are investing - how they are allocated, how much risk and the types of risk they are taking, and how those choices may perform under stress scenarios and growth scenarios. 

We take an enterprise view, leveraging data from public financial statements of 50 US hospitals to provide an in-depth analysis for each system.  We can also customize the peer group and add systems on an ad-hoc basis too.

Calvin:  Cool.  So what asset allocation trends are you seeing in the latest study?  

Anne Marie:  Calvin, the most notable and understandable shifts have been changes in cash and short-term liquidity.

In fiscal year 2019, a 10% average enterprise allocation to cash was typical relative to balanced exposures across fixed income, equities, and alternatives.

In fiscal year 2020, cash levels swelled as hospitals built up defensive liquidity from CARES grants, Medicare Advances, and issued debt and opened lines of credit. 

In fiscal year 2021, cash and fixed income levels started to come back down as both operations and markets stabilized, and Medicare Advances began to be repaid.   We also see combined exposure to risk assets like equity and alternatives edging up as valuations rose in 2021.

However, 2022 is shaping up to be a significant challenge.  With expenses up 15-20% for many systems, it's been difficult for operating cash flows to keep pace.   We could see cash levels lower.  And with this year’s market sell off, we would expect lower public allocations but higher private allocations as those valuation changes lag.

Calvin:  Yeah, with this year’s historic market drawdown, I’d imagine how much risk and the type of risks you’re taking really mattered.  So what does the risk profile of a hospital systems look like?

Anne Marie:  The 50-60% allocations to equity and alternatives drives nearly all the risk for most hospital portfolios.  Fixed income – which is interest rate risk and spread risk - has been providing very little downside protection.  Some hospitals who diversify their fixed income exposure in both public and private credit benefit from spread risk diversification. 

On the flip side, alternatives can be a good source of diversification, especially hedge funds, private credit, and infrastructure, which are among the most risk efficient asset classes in our capital markets framework. 

When we compare system level expected risk vs. expected return, we do generally see those more diversified systems generating more return for the risk taken relative to peers.

Calvin:  So I understand investments are really important to the financial strength of hospitals.  So how do hospital system portfolios perform under stress?

Anne Marie:  That’s an important question Calvin.  

Anne Marie:  We see that in historical scenarios, like the Crash of 2008 or the Covid drawdowns in 2020, the instantaneous drawdown ranges from the mid-teens to the mid-twenties percentages. 

Unfortunately, that also sounds a lot like the current period.

So the risk appetite of a lot of systems is being tested right now when you look at the impact on key financial strength metrics, like Days Cash on Hand or Cash to Long Term Debt.  Debt covenants are a near term concern for some, and balance sheets may be tested by both prolonged market and operating pressure. 

Calvin: It sounds like a dialog about maximizing returns for a hospital’s preferred level of risk is really important right now.   
So thanks for this chat!  A lot of hospital systems have been asking about this topic, so let’s set up meetings to take them through a customized peer study!

Anne Marie:  That sounds great Calvin!


Clients provide data to BlackRock regarding their existing portfolios. The case study and screenshots in this material are for illustrative purposes only and are intended to describe BlackRock’s capabilities. Actual account outcomes may vary.


Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. You should consult your tax or legal advisor regarding such matters.

This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of yields or returns, and proposed or expected portfolio composition. No representation is made that the performance presented will be achieved by any asset allocation or investment, or that every assumption made in achieving, calculating or presenting either the forward-looking information or the historical performance information herein has been considered or stated in preparing this material. Any changes to assumptions that may have been made in preparing this material could have a material impact on the investment returns that are presented herein by way of example.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offeror solicitation to buy or sell any securities or to adopt any investment strategy. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. There is no guarantee that any of these views will come to pass. BlackRock does not guarantee the suitability or potential value of any particular investment. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not indicative of future results.

Investing involves risk, including possible loss of principal.

Equity and fixed income characteristics and allocations are for informational purposes only. Such characteristics and allocations are not intended to be predictions or projections of any portfolio's performance. Diversification does not assure a profit nor does it protect against loss of principal.

Aladdin Portfolio Risk Analysis: Charts and graphs provided herein are for illustrative purposes only. Neither BlackRock nor the Aladdin portfolio risk model can predict a portfolio's risk of loss due to, among other things, changing market conditions or other unanticipated circumstances. The Aladdin portfolio risk model is based purely on assumptions using available data and any of its predictions are subject to change. For BlackRock products, data about the specific underlying holdings are used when applying the Aladdin risk model. For third party funds, BlackRock uses underlying holdings, or in certain cases, determines appropriate proxies for relevant holdings using a combination of Morningstar and other publicly available data sources. Product specific inputs are typically based on the latest disclosed data, which may be lagged.

The information contained in this presentation is proprietary and confidential and may contain commercial or financial information, trade secrets and/or intellectual property of BlackRock. If this information is provided to an entity or agency that has, or is subject to, open records, open meetings, “freedom of information”, “sunshine” laws, rules, regulations or policies or similar or related laws, rules, regulations or policies that require, do or may permit disclosure of any portion of this information to any other person or entity to which it was provided by BlackRock (collectively, “Disclosure Laws”), BlackRock hereby asserts any and all available exemption, exception, procedures, rights to prior consultation or other protection from disclosure which may be available to it under applicable Disclosure Laws.

©2022 BlackRock. All rights reserved. BLACKROCK and ALADDIN are trademarks of BlackRock, Inc. All other marks are the property of their respective owners.


Our peer risk study aims to spark dialog around how hospital systems are investing - allocation choices, risk tolerance and how those decisions may perform under stress and growth scenarios.

We take an enterprise view, leveraging data from public financial statements of 50 U.S. hospitals to provide an in-depth analysis for each system.

The portfolio risks hospitals are taking to pursue growth that can outpace inflation has taken on more significance as mounting operating and economic pressures begins to weigh on some balance sheets.

Interested in a peer analysis discussion?

Get in touch with BlackRock’s healthcare team to have your portfolio analyzed against your peers. It is an excellent resource to review how a range of systems are navigating many of the same challenges you might be facing in this market environment.
Learn more Learn more
Contact us


Anne Marie Schultz
Head of U.S. and Canada Healthcare Business
Calvin Yu
Head of the Client Insight Unit (CIU)
Sarah Siwinski
Member of the Client Insight Unit (CIU)

Sign up to receive BlackRock's institutional insights

Please click here to opt-in to receiving insight emails from BlackRock. Any data collected will be processed according to BlackRock's privacy policy. You may unsubscribe at any time.

*Required information | Read our Privacy policy

Thank you for reaching out!

A BlackRock representative will reach out shortly. In the meantime, explore our website to read insights on the markets, portfolio design and more.

Explore our insights hub