Nonprofit healthcare sector not as affected by rating downgrades, S & P claims

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Nonprofit healthcare sector not as affected by rating downgrades, S & P claims
Nonprofit healthcare sector not as affected by rating downgrades, S & P claims
Standard & Poor's has said that its downgrade of the long-term sovereign rating on the United States will not have a significant impact on ratings in the nonprofit healthcare sector. However, the ratings agency said it is growing increasingly concerned about government reimbursement to healthcare providers long-term.

The S&P, which earlier this week put six of its rated for-profit nursing home operators on Credit Watch, said in a written statement Wednesday that the diligence displayed by health system management teams in managing costs and limiting capital expenditures have contributed to the stability of the sector. The agency said the Patient Protection and Affordable Care Act's 2010 passage did contribute to S&P's risk concerns about healthcare reimbursement. But Congress' debt reduction agreement and the country's fiscal condition are a greater worry, S&P said.

The agency said nonprofit health systems retain significant credit strengths, including strong balance sheets and business positions that will help it weather the reduced reimbursements.

“However, we believe that those with already-thin operating margins, inflexible cost structures, and high dependence on governmental payers are more likely to experience credit stress over the next few years,” it added.