The rating agency’s outlook revision is based on its expectation that operational strength will continue to drive the sector until at least the end of 2016.
S&P identified several strengths to support its rating upgrade, including broad improvement to the sector’s financial performance and the positive impact of the Affordable Care Act on providers via improvement in volume levels and payer mix and reduction in uncompensated care.
The rating agency also said sustained, even improved, unrestricted liquidity positions over the last year supported the rating revision. However, S&P said it is too soon to assess recent volatility in investment markets on the nonprofit sector’s credit quality.
S&P also considered the sector’s challenges, such as continued uncertainty on multiple fronts and the expectation of longer term revenue pressures.
S&P’s outlook upgrade comes about two weeks after Moody’s Investors Service revised its outlook on the U.S. nonprofit healthcare sector to stable from negative.
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