Fitch and Moody's offer different outlooks on nonprofit healthcare sector

Both Fitch Ratings and Moody's Investors Service released outlooks on the nonprofit healthcare sector this week, with Fitch giving the sector a negative outlook and Moody's saying the sector's outlook for 2016 is stable.

Fitch expects relative stability in overall 2016 rating actions, as hospitals have generally built solid financial cushions to absorb potential operating volatility. However, the credit rating agency gave the sector a negative outlook due largely to "increasing headwinds that will challenge hospitals over time."

Moody's maintained its stable outlook on the nonprofit and public healthcare sector for 2016, as the credit rating agency expects cash flow to grow and patient volume to moderate. Moody's originally changed the sector's outlook from negative to stable in August.

"Hospital cash flow growth is strong following years of lower trending although we expect it to moderate to historical levels of 3 percent to 4 percent," said Daniel Steingart, a Moody's vice president – senior analyst.

Like Fitch, Moody's recognized the sector faces longer term pressures. Among these risks are investments in population health strategies and increased exposure to government payers.

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