Fitch Ratings 2008 outlook for not-for-profit hospitals remains stable, following a year of extraordinarily strong financial results, the credit rating agency said in its just-released report.
In general, 2008 is expected to be a continuation of current industry trends, but Fitch also is anticipating moderated profitability resulting from reimbursement constraints. Fitch said results will vary from market to market, but it anticipates stable operating margins in its portfolio of rated hospitals and a more balanced ratio of downgrades to upgrades. In 2007, Fitch upgraded 19 hospitals and downgraded six, affecting $8 billion and $45 million of debt, respectively.
The shift in volume to outpatient from inpatient settings will persist in 2008 with inpatient volume trends mixed throughout the nation. Aging plants, consumerism, quality and safety initiatives, competitive pressures, and favorable credit access will continue to fuel increased capital spending although the cost of capital will rise over the near to medium term. Although that would seemingly make it more difficult for lower rated credits to access capital, competitive forces may compel them to build anyway. Even with favorable debt market access, smaller or fiscally challenged providers may be forced into partnerships to secure necessary capital, Fitch said. -- by Cinda Becker
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