Credit ratings agency Fitch upgraded two non-profit hospitals and downgraded six in the second quarter of 2023.
The upgrades:
- Ashland, Ky.-based King's Daughter Medical Center
- Sacramento, Calif.-based Sutter Health
The downgrades:
- Beaver, Pa.-based Heritage Valley Health System
- Burlington, Va.-based University of Vermont Medical Center
- Butler (Pa.) Health
- Marshall, Mo.-based John Fitzgibbon Memorial Hospital
- Toledo, Ohio-based ProMedica
- Yale New Haven (Conn.) Health
At the end of the second quarter, 83 percent of non-profit hospitals had a stable rating outlook, 11 percent had a negative rating outlook and 5 percent had a positive rating outlook. Fitch pointed toward labor market shortages, inflation and challenges in the equity market as reasons for the poor outlook, according to the July 20 report.
The credit ratings agency projected more merger and acquisition discussions in the healthcare sector as providers look to decrease financial pressure on hospitals.
Fitch did conclude that the situation could be improving for hospitals. In June, the agency found that healthcare wage inflation was beginning to ease. Fitch found that 2022 was the most challenging year for many hospitals and expects operations in 2023 to slowly improve.
"While the sector remains vulnerable to higher levels of staffing expense, and has for an extended period of time, key measures such as turnover rates and the number and cost per hour for external contract labor, are beginning to trend more favorably," the report said.