Fitch: Margins getting harder to meet at nonprofit hospitals

Fitch Ratings is maintaining a negative outlook for the sector based on its evaluation of audited 2017 data. (Getty/holwichaikawee)

Stable outlook

Despite the negative sector outlook due to operational pressures and uncertainty in operating margins, Fitch gave a Stable Rating outlook, citing the improvements in providers' improving balance sheet strength.

The report also notes capital spending increased in fiscal 2017 for the third year in a row after hitting an eight-year low in fiscal 2014. But the type of spending is changing, he said. 

About 10 years ago, two-thirds of every dollar spent in healthcare was on that classic inpatient tower, Holloran said. That number has dropped to about 35%.

Where is that money being spent?  "It really went into ambulatory. So the kind of spending you're seeing now isn't that big $100 million-plus, multiyear spend on a huge bed tower which tends to occupy a lot of time and a lot of energy and a lot of focus. Now it's more multiple smaller projects on ambulatory buildings, ambulatory surgery centers, free-standing EDs and access points. More frequent projects at a lower cost that add up."