Acute-care hospitals will face a constrained operating environment in 2024 as high labor and operating costs persist, which, for many providers, have not been entirely offset by improving revenue trends, S&P Global Ratings said in a Dec. 8 report.
Although acute contract labor expenses have decreased, many hospitals continue to see a discrepancy between the rate of growth across expenses and revenue, according to the report.
As longer-range capital plans and strategic investments ramp up, additional spending or debt issuances may also influence credit quality, depending on balance sheet strength and the level of cash flow improvement.
"The pace of margin recovery, supported by labor management, throughput and efficiency gains, and performance improvement plans, coupled with balance-sheet and enterprise strengths, will be key for providers to maintain credit quality in the coming year," S&P Global credit analyst Suzie Desai said.