Fitch revised Chicago-based CommonSpirit Health’s rating outlook to negative from stable on Sept. 16, while affirming the health system’s “A-” rating.
The revision follows CommonSpirit’s financial results through the quarter ended March 31, which fell short of management’s internal margin targets, Fitch said in a Sept. 16 report. Fitch pointed to an uneven path to sustained profitability as the system executes several overlapping initiatives at once, including an Epic EHR rollout, insourcing revenue cycle operations and its multiphase Project Impact plan, which targets an 8% EBITDA margin by fiscal 2029.
CommonSpirit’s liquidity grew to more than $17.2 billion, with further growth expected by year-end from anticipated FEMA funding and California provider fee reimbursements, according to the report. Fitch also noted CommonSpirit’s capital spending as more aggressive than previously assumed, averaging more than $3 billion annually over the next five years — from $2 billion in fiscal 2026 to about $3.7 billion in later years.
Fitch said the spending, along with anticipated borrowing and the upfront cost of funding improvement initiatives, will limit balance sheet accretion over the near-to-intermediate term.
“The system will be required to implement these initiatives successfully, on pace and at the articulated levels, in order to both fund capital needs and overcome expected industry headwinds,” Fitch said.
