Nonprofit hospitals will continue to struggle in 2019, Fitch says

Fitch Ratings has maintained its negative sector outlook on nonprofit hospitals and health systems for 2019.

The outlook is based on Fitch's expectation that provider organizations will continue struggling with operational weaknesses amid a challenging healthcare environment.

Healthcare providers "now have to continuously focus on operational, clinical and transformational initiatives to offset compressed commercial rate increases and little, if any, net rate increases from governmental sources," said senior director Kevin Holloran.

But Fitch said positive balance sheet metrics, such as days cash on hand, cash to debt and debt to capitalization, will help counter operational pressures for larger systems that are more able to cut costs. 

Fitch said it also anticipates hospital mergers and acquisitions to continue next year.

Overall, Fitch maintained a stable rating outlook for the nonprofit hospital and health system sector next year. Mr. Holloran said this reflects Fitch's expectation that ratings will be balanced when looking at absolute levels of upgrades and downgrades.  


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