Although many nonprofit hospitals and health systems recorded steady finances in fiscal year 2012, the same may not be said at this time next year, according to the newest median reports from Standard & Poor's Ratings Services.
S&P released median ratios for health systems and standalone hospitals. S&P rates 144 health systems, which it defines as organizations with at least three hospitals, and 409 standalone hospitals.
Among all health systems, S&P found net patient revenue increased 6 percent from 2011 to 2012, with the median at $1.47 billion. S&P attributed the growth to the rise in employed physicians, the Medicare rural floor payment settlement, meaningful use incentives and Medicaid provider fees, but the rating agency said patient utilization still remained flat.
Standalone providers similarly saw strong revenue growth, despite lagging volumes and small reimbursement increases, for the same reasons as health systems. However, S&P analysts said standalone hospitals in particular will undergo steepening challenges, such as declines in patient admissions, higher investment costs for physician recruitment and technology and pressures associated with pensions.
S&P said the relatively strong hospital and health system median ratios in 2011 and 2012 indicate CEOs and CFOs are focusing on maintaining the balance sheet and strong liquidity, but 2013 medians are likely to plateau or drop off altogether.
"The 2012 medians reflect a continuation of the peak in metrics reached in 2011, but we expect ratios to soften gradually in the next one to two years as incremental pressures persist and even intensify amid industry changes related to healthcare reform," said Kenneth Gacka, an S&P credit analyst, in a news release.
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