Audit expert: UVM Health Network’s finances readable but policy needs clearer goals; outside hospitals drag metrics

Nancy Kane, professor emerita at the Harvard T.H. Chan School of Public Health, briefed the Senate Health and Welfare committee and asked legislators to define the policy questions they want answered before ordering new audits of hospital systems.

Kane said audited financial statements and a standard set of financial metrics — profitability (operating and total margins), liquidity (days cash on hand and absolute cash and investments), solvency (long‑term debt as a share of capitalization and debt‑service coverage) and capital adequacy (capital spending relative to depreciation and average age of plant) — can give a credible, audited picture of a system’s finances. But she cautioned an audit’s value depends on the questions policymakers want answered and noted that many operational efficiency questions require cost accounting data rather than external financial statements.

“What financial data is very helpful for is looking at…