Ongoing pressures signal weak nonprofit hospital finances

According to major ratings agencies, the financial outlook for not-for-profit hospitals will remain negative for at least the next several years, reported AHA News Now. In separate reports issued by Moody's Investors Service and Standard & Poor's, both rating services see a tough operating environment ahead for hospitals.

"While performance within the sector is expected to remain variable in 2012, the preponderance of credit factors is negative, and is expected to remain negative for the next several years," Moody's Senior Analyst Brad Spielman, who authored his agency's report, said in a statement. Spielman cited ongoing federal budget pressures, the onset of large portions of the Affordable Care Act and ongoing economic uncertainty as the primary drivers.

"The pressure is being applied by all sources of hospital revenue, including Medicare, Medicaid, and commercial payers," Spielman said.

S&P believes that negative credit quality "will be negatively affected, perhaps as early as 2013, due to an increasingly difficult operating environment," noted AHA News Now. "Conditions include tighter revenues, weaker payer mixes, (and) generally declining to at best stable inpatient volume trends."

To learn more:
- read the AHA News Now brief
- here's the Moody's press release