How to use this calculator
- Enter or choose net patient service revenue.
- Enter or choose other operating revenue.
- Enter or choose total operating expenses.
- Enter or choose non-operating gains (losses).
- Enter or choose depreciation and amortisation.
- The operating margin updates as you type. Use Copy result or Share to keep it.
Method
Operating margin = (Operating revenue − Operating expenses) ÷ Operating revenue; Total margin = (Operating income + Non-operating) ÷ (Operating revenue + Non-operating); EBITDA margin = (Operating income + D&A + Interest) ÷ Operating revenue
- Operating revenue
- net patient service revenue + other operating revenue
- Non-operating
- non-operating gains less losses
- D&A
- depreciation and amortisation
Worked example
- Operating revenue = 950M + 50M = $1,000M; operating income = 1,000M − 970M = $30M.
- Operating margin = 30 ÷ 1,000 = 3.0%; total margin = (30 + 20) ÷ 1,020 = 4.9%.
- Operating EBITDA = 30 + 40 + 10 = $80M, or 8.0% of operating revenue.
A hospital with $1 billion of operating revenue and $30 million of operating income has a 3% operating margin and a 4.9% total margin.
What the result means
A negative operating margin means the hospital relies on investment income or donations to cover its core costs. Compare against your own history and peer benchmarks published for your region and hospital type.
Assumptions and limits
- Depreciation, amortisation and interest are included in operating expenses, as in most US hospital financial statements.
- Figures cover the same period.
- Accounting classifications differ between hospitals and countries, so comparisons need consistent definitions.
- Does not adjust for one-off items.
Questions
What is the difference between operating and total margin?
Operating margin only counts the hospital’s core activities. Total (excess) margin also includes non-operating items such as investment returns and donations.
Why add back interest for EBITDA?
Hospital statements usually put interest inside operating expenses, so adding it back with depreciation and amortisation shows earnings before financing and capital costs.