CommonSpirit’s “substantial size, diversity and national scale convey rating strength beyond the face value of these metrics,” Fitch said in a Feb. 20 report.
Fitch said the health system improved its profitability in fiscal 2024 by reducing external contract labor use, increasing volumes and implementing productivity initiatives.
CommonSpirit, like many health systems, is facing “stubbornly persistent operational challenges despite meaningful progress,” Fitch said. Those challenges include lower acuity levels, labor scarcity and high wage inflation.
The health system posted an operating loss of $581 million (-1.5% operating margin) in fiscal 2024, which ended June 30. That was an improvement from an operating loss of $1.3 billion (-3.6% margin) in 2023.
“Due to operational challenges, the planned return to a better-than-break-even operating margin on an annual basis is unlikely before fiscal 2026,” the report said. “However, Fitch Ratings sees this as a delay in, not a rejection of, CommonSpirit’s multiyear journey to operational profitability and balance sheet accretion.”
CommonSpirit has a stable outlook with Fitch.
