CHA News Article

Credit Rating Agencies Report Stable Outlook for Non-Profit Hospitals in 2013, Uncertainty Ahead

Two credit rating agencies, Standard and Poor’s and Fitch Ratings, have reported stable outlooks for non-profit hospitals in 2013. However, both agencies see troubling developments ahead. Standard and Poor’s expects credit quality trends to be less favorable, as providers confront a number of growing challenges. These will include federal reimbursement reductions in the recently signed American Taxpayer Relief Act of 2012, the remaining threat of sequestration or negotiated Medicare cuts later this year, increased health care reform preparation, and new incentives and penalties for meeting or failing to meet value-based purchasing standards. Fitch Ratings anticipates more uncertainty beyond 2013 as opportunities for further cost-cutting wane and a wave of expected reimbursement reductions are realized under full implementation of the Affordable Care Act beginning in 2014. In addition, there is risk of further reimbursement reductions given that the federal government has acknowledged the need for entitlement reform, which would target the Medicare and Medicaid programs. For more information, see attached reports.