Unfavorable outlook revisions in 2020 spiked to levels higher than Great Recession: S&P

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While many nonprofit hospital and health system medians remained stable in 2020, unfavorable outlook revisions spiked last year, according to an Aug. 30 S&P Global report. 

Here are five key takeaways from the report. 

1. Credit rating upgrades in 2020 declined, with just eight of them reported in 2020. Of the eight reported, five occurred during the first quarter. However, credit rating downgrades increased in 2020, outpacing upgrades in a 4 to 1 ratio. 

2. Unfavorable outlook revisions, primarily to negative from stable, spiked to 73 in 2020. This compares to an annual 10-year average of 40 from 2011-20. S&P noted these levels exceeded the unfavorable outlook changes experienced during the Great Recession in 2008 and 2009. 

3. After a decade of growth, net patient service revenue declined 2.4 percent in 2020 year over year, primarily because of the widespread ban on elective procedures early in the pandemic. 

4. However, overall operating revenue increased 3.2 percent in 2020 compared to 2019 because of federal relief aid from the Coronavirus, Aid, Relief and Economic Security Act. 

5. Balance sheet metrics generally strengthened in 2020 compared with 2019. For example, nonprofit healthcare providers saw higher days' cash on hand, improved unrestricted reserves relative to debt, and slightly lower contingent liabilities. For example, median days' cash on hand increased from 210 in 2019 to 233 in 2020. 

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