Hospitals' access to credit for construction and technology depends less on the weak U.S. economy than on investors' opinion of the industry and borrowers' financial performance, Standard & Poor's Martin Arrick told attendees of the Healthcare Financial Management Association's annual conference in Orlando, Fla.

“Your access to capital, I really think, is up to you,” said Arrick, managing director of not-for-profit healthcare ratings for Standard & Poor's.

The economy, growing at half-speed as real estate markets and employment continue to struggle, does affect government revenue that funds subsidized insurance, Arrick said.

Hospitals saw little or flat growth in the number of patients seeking care during the recession, which he said he expects to continue. “I would say flat is the new normal,” he said.

Among roughly 600 hospitals and health systems rated by Standard & Poor's, performance continues to be strong, according to an early analysis of 2010 median operating measures that shows nearly uniform improvement despite flat volume. Hospitals have produced the gains in part thanks to cutting expenses, he said, but Arrick questioned whether that strategy would continue to produce results.

Hospitals face pressure from multiple sources that could erode balance sheets, but none alone could upend credit access, he said. “There's no smoking gun where all of the sudden credit quality is going through the floor,” he said. Among those pressures are states seeking to erase recession-related budget deficits without federal financial relief for the first time, he said. “We think they will be balancing their budgets, in part, on the backs of healthcare,” Arrick said. “They can't control their budget without controlling healthcare.”

Nonetheless, results of the upcoming presidential election and, more immediately, the debate over raising the nation's debt ceiling, could significantly impact healthcare providers. If Democrats lose the White House, they lose their grip on healthcare reform, he said. And to expect a resolution on the debt ceiling is “betting on Congress to do the right thing,” he said, “and that doesn't seem like the best bet.”

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