Small Hospital's Financial Ratios Show Effects of Industry Reforms
This may sound obvious, but Standard & Poor's Ratings Services is reporting that not-for-profit small hospitals' median financial ratios were mixed in 2012, in alignment with the degree of success these hospitals have had in responding to sweeping reforms in the healthcare industry.
S&P credit analyst Avanti Paul said in the report that median revenues, cash flow, and other measures of financial health reflected two diverging trends.
"Some hospitals were able to improve their margins and maintain balance-sheet flexibility despite their limited revenue base while others have been unable to cope with volume declines, physician turnover, or the costs of implementing electronic health records," Paul said.
S&P reports that higher-rated hospitals' financial profiles are getting stronger, while lower-rated hospitals are weakening. "We expect this trend to continue in the next two years if, as we believe, incremental credit pressures, such as continued volume declines and reimbursement constraints will continue to build and as a result test hospitals' performance, and likely lead to more mergers," S&P said.