<0> Fitch: U.S. Children's Hospitals Prepared for Healthcare Reform </0>
<0> Fitch RatingsEmily Wong, +1-212-908-0651Senior DirectorPublic Finance - Healthcare1 State Street PlazaNew York, NYorRob Rowan, +1-212 908-9159Senior DirectorFitch WireorMedia RelationsElizabeth Fogerty, +1-212-908-0526 </0>
Standalone children's hospitals continue to exceed the financial metrics of the general U.S. not-for-profit (NFP) acute care hospitals, according to a recent report by Fitch Ratings, and their financial strength has positioned them well for healthcare reform. They have grown total revenue year over year with solid operating margins, despite the high percentage of exposure to Medicaid reimbursement.
The standalone children's hospitals used in the report demonstrate strong liquidity, improved operating profitability, and robust capital spending with moderating debt burden. In 2012, the median standalone children's hospital had 248.7 days cash on hand and 12.8% operating EBITDA compared with general NFP acute care hospitals which recorded 181.7 days cash on hand and 9.4% operating EBITDA.
In 2012, standalone children's hospitals reduced their capital spending since many have made significant investments over the last several years in major expansion projects or replacement facilities. Standalone children's hospitals have an advantage over other general acute care providers given their market position in highly specialized services. As the coordination of care grows across the various sectors of healthcare, we expect them to remain key partners. Some have also begun to enter risk-based contracts for a portion of its Medicaid population by accepting capitated payments.
More details can be found in the report "2013 Median Ratios for Not-for-Profit Children's Hospitals" dated May 7, 2013 and available on Fitch's website:
Additional information is available on .
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at . All opinions expressed are those of Fitch Ratings.