Children's hospitals' financials stumble but remain relatively robust: Fitch

While median cash flow metrics at the nation's children's hospitals may have declined to their lowest level in ten years, their median ratings are superior compared with acute care health systems, Fitch said in a July 10 report.

Such stand-alone pediatric care systems are dealing with many of the same problems as their overall acute care counterparts such as labor costs and investment portfolio pressures but are doing well regarding favorable reimbursement and unique market positions, which allow for more consistent performance, Fitch said. They also generally maintain a lower debt load.

"The unique credit profile of standalone children's hospitals is reflected in a strong median rating of 'AA–' compared to the 'A+' median rating of Fitch's overall not-for-profit hospitals and healthcare systems," according to the report.

Fitch described the median days of cash on hand as a "precipitous drop" from 2021 highs but such levels are still higher than overall acute care facilities and are still in line with pre-pandemic levels, the report noted. The median days cash on hand for children's hospitals is 323.

The main risks facing children's hospitals are their higher exposure to Medicaid reimbursement and the overall decline in the birth rate, Fitch said.

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