Children's hospitals have stronger financial bearings

Children's hospitals are faring better financially than their general acute counterparts, according to a new report from Fitch Ratings. The ratings firm reported that the average standalone children's hospital had a rating of AA-, one point higher than the average A- rating for all other hospitals and hospital systems.

"The higher average rating reflects children's hospitals' robust liquidity, unique market positions, strong philanthropic support, and specialized clinical services," the report said. It noted that capital spending is much higher than among non-specialty hospitals.

Children's hospitals also have a much higher visibility than general acute care facilities. For instance, a recent video for Seattle Children's Hospital that featured patients lip-synching to a Kelly Clarkson song recently went viral and may boost philanthropic efforts, reported the Associated Press.

Fitch also suggested there are some weaknesses in the children's hospital realm. For example, it has a much higher exposure to government payers than the general acute care sector.

"Children's hospitals are typically exempted or cushioned from Medicaid cuts, reflecting societal and political support to provide pediatric services … children's hospitals were either exempted or shielded from many of the recent inpatient Medicaid cuts in Florida and Texas," the report said. "Fitch views this political support as a key credit strength and historically has mitigated credit concerns regarding the high exposure to Medicaid."

To learn more:
- here's the Fitch ratings report (registration required)
- read the Associated Press article