Credit Gap Widens Between Not-For-Profit Hospitals
Jan. 28—The credit-metrics gap between lower-rated and higher-rated not-for-profit hospitals will likely continue to widen, according to a special report released late last week by Fitch Ratings.
Given the capital resources and managerial expertise required to invest in new alignment strategies under reform, lower-rated hospitals will face more of a struggle in making these investments. Higher-rated not-for-profit hospitals typically have higher profitability and liquidity and thus greater resources to reinvest in their plant and strategies than their lower-rated counterparts, according to the report, titled Nonprofit Hospital Consolidation, Integration and Alignment.
Higher-rated hospitals also are typically larger, allowing them to absorb new operations, assume risk, and spread fixed costs across a larger revenue base.
Lower capital spending rates will continue to negatively affect lower-rated hospitals’ ability to invest in IT, physician alignment, and clinical technology, thus negatively affecting their ability to react to the evolving environment, the report says.
Publication Date: Monday, January 28, 2013