January 11, 2023 07:18 PM<\/span>
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Nonprofit healthcare systems are in for a tough year, but a Fitch Ratings report released Wednesday projects even the hardest-hit providers\u00a0may start to see improvement in the coming months. <\/p>\n

The industry ended 2022 with depressed margins<\/a>, and some health systems saw\u00a0billions of dollars in operational losses. High labor costs, along with\u00a0ongoing supply chain issues and inflation, continue to drag on systems\u2019 financial performance. The challenges have no short-term fix, and labor expenses are expected to stay elevated through at least 2023, said\u00a0Kevin Holloran, senior director at Fitch.\u00a0<\/p>\n

The credit ratings agency downgraded the nonprofit health system\u00a0sector to \u201cdeteriorating\u201d in August and maintains that outlook in its latest report, acknowledging the likelihood that negative outlooks for health systems will outnumber positive ones for a time.\u00a0<\/p>\n

Holloran said hospitals still need a better balance between medical and surgical volumes. The so-called \u201ctripledemic\u201d \u2013 COVID-19, respiratory syncytial virus and flu \u2013 means fewer inpatient beds are being used for revenue-driving services like elective surgeries.<\/p>\n

\u201cIt\u2019s almost a running joke that \u2018I lose money for every case I do\u2019 because the labor is so expensive, particularly in those medical cases,\u201d Holloran said.<\/p>\n

But 2023 could be a turning point, according to the report, which projects many providers will be able to break even in their operations on a month-to-month basis sometime this year, with “gradual improvement” from there.\u00a0<\/p>\n

\u201cWe think that we are beginning to come out of the worst of it and towards the end of the year, sometime during this year, we\u2019re going to break through that barrier and get more and closer to back to normal,\u201d Holloran said.<\/p>\n

That doesn’t mean providers will leave\u00a0their financial challenges behind. More systems are at risk of defaulting on credit agreements this year \u2013 a situation exacerbated by declining cash flow and growing interest expense. In December, Moody\u2019s Investors Service reported 34 healthcare organizations were\u00a0rated B3- or lower<\/a>, holding nearly $65 million of combined outstanding debt. Improvements in the investment markets or debt waivers would soften some of the hit to credit ratings, the Fitch report noted.<\/p>\n

Holloran\u00a0said he expects more systems to exit payer networks and contracts, as well as push for shorter contract periods, as providers continue to navigate expenses.<\/p>\n

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\n Caroline Hudson<\/p>\n","protected":false},"excerpt":{"rendered":"

Skip to main content January 11, 2023 07:18 PM Nonprofit healthcare systems are in for a tough year, but a Fitch Ratings report released Wednesday projects even the hardest-hit providers\u00a0may start to see improvement in the coming months. The industry ended 2022 with depressed margins, and some health systems saw\u00a0billions of dollars in operational losses.<\/p>\n","protected":false},"author":1,"featured_media":597192,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33791,1458],"tags":[],"class_list":{"0":"post-597191","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-fitch","8":"category-turning"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/597191","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=597191"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/597191\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/597192"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=597191"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=597191"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=597191"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}