3 Ways Nonprofits Were Able to Increase Cash Flow

For CFOs, the report is both a spotlight on improved performance and cautious reminder of where challenges still lie.

Nonprofit hospitals showed a significant improvement in financial performance during the 2024 fiscal year, according to a new Moody’s report. Median operating cash flow margins climbed to 6.3%, up one percentage point from the prior year.

First, check out the report’s highlights.

The CFO To Do

Moody’s data shows encouraging trends for nonprofits, including improved liquidity, rising margins, and sustained revenue growth. But the report also highlights lingering vulnerabilities, particularly among lower-rated and smaller hospitals.

While most hospitals improved cash reserves, a wide gap remains. CFOs at health systems rated Baa and below must develop aggressive liquidity plans. They should think about leveraging investment returns, factoring in reserve thresholds, and preparing for reimbursements volatility.

Speaking of leveraging investment returns, CFOs should ensure their capital investment strategies are tailored. With capital spending steady yet cautious, CFOs must prioritize high‑ROI investments, potentially focusing more on outpatient expansion and strategic cost-saving technologies rather than broad capital expenditure.

Additionally, managing revenue from volume upticks and one-time payments must be done strategically, or it will be unsustainable. CFOs should guard against cost inflation by doubling down on labor optimization, supply chain efficiencies, and capital discipline.

On the back end, CFOs must also be sure to mind their debt carefully.
Improving debt-to-cash-flow and debt-to-revenue ratios present refinancing and strategic borrowing opportunities. Use this window of financial leverage to improve infrastructure—but avoid overextending, especially amid uncertain capital needs.

Outdated player strategies must also be revamped for CFOs to sustain progress.
Rising Medicare volumes and increasing managed-care denials will call for more robust revenue cycle oversight, claim denial analytics, and payer negotiations to safeguard reimbursement integrity.

Lastly, credit-rating mindset matters. Credit rating continues to show a strong correlation to financial flexibility. CFOs should engage proactively with rating agencies, showcase margin improvement, and emphasize liquidity and debt management to solidify or upgrade ratings.

The report offers CFOs both confirmation of hospitals’ improved performance and also a cautious reminder that while progress is being made, vigilance, strategic alignment, and continued cost discipline are key to sustaining the turnaround.