Nonprofit hospitals 'well-positioned to compete' amid healthcare disruption, S&P says

Kelly Gooch -

Nonprofit hospitals and health systems have been able to adapt to the evolving healthcare landscape over the years due to effective management, S&P Global Ratings said in a report published May 13.

S&P said healthcare has transformed over the last 20 years and continues to change quickly.

Although the transformation is partly due to legislative and regulatory changes at the state and national levels, technological disruption and other factors are also contributing to significant, according to the report.

"Hospitals and health systems have had to navigate through increasing levels of competition and disruption; consumerism and the heightened focus on quality measures and outcomes; the rapid growth in technology and big data analytics, the rise of population health and changes in payment delivery models and a fundamental shift in how and where patients are treated," the report says.

"All of these issues and many more are increasingly interwoven into the fabric of today's healthcare delivery system. To be successful, provider management teams must adapt and adjust or run the risk of being left behind," it adds.

S&P said nonprofit hospitals and health systems have been "incredibly resilient" to these healthcare changes, primarily due to strong management and governance.

The ratings agency said this is evidenced by organizations' broad balance sheet measures, which indicate improving financial strength and flexibility compared to levels 20 years ago.

"The past 20 years' transformation has taken place at an increasing pace, encouraging our belief that even more change is coming. Many of the hospitals and health systems in our rated portfolio have had to manage this evolution, and while credit quality can and will change over time, we believe the majority of our rated portfolio is well-positioned to compete effectively as new strategies are required," the report said.

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