On Jan. 9, Fitch Ratings finalized rating criteria changes for U.S. nonprofit hospital and health system revenue debt. Since then, the agency has seen more rating upgrades than downgrades, according to an update released April 16.
Here are five things to know about the criteria's effect so far.
1. Fitch said affirmations have made up a majority of rating actions (approximately 60 percent) since the criteria launch.
2. More notably, rating upgrades among hospitals Fitch had placed on rating watch have outpaced rating downgrades so far by 14 percent, according to the update. Fitch said it specifically upgraded five of eight hospitals it placed on rating watch positive so far and downgraded only two of six hospitals it placed on rating watch negative.
3. Kevin Holloran, senior director and head of Fitch's U.S. nonprofit healthcare group, said of the findings, "Considering the challenges nonprofit hospitals were set to face at the start of the year, most are showing robust resiliency as the assorted headwinds are not affecting operating performance thus far."
4. Fitch attributed the findings to stronger hospitals "responding with alacrity in maintaining strong balance sheets and keeping debt levels manageable during periods of financial stress or transformation." However, the agency said, hospitals with a negative rating at this point "are having more difficulty withstanding financial pressures and stabilizing their balance sheets."
5. Fitch initially predicted about 15 percent of its roughly 300 ratings would be affected over time by the new criteria. Mr. Holloran still anticipates this will be the case over time.
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