Fitch Ratings revised its outlook for not-for-profit hospitals and systems to stable from negative.
Fitch sees better outlook for not-for-profits
Hospitals successfully cut costs to offset weak demand and fewer insured patients and will continue to rely on the strategy in 2011, the New York credit rating agency said in a new report. Fitch analysts said operating margins recovered to near the last decade's highs as hospitals curbed spending on labor, supplies and capital investments.
Preparation for upcoming provisions in the Patient Protection and Affordable Care Act, such as Medicare accountable care organizations, may benefit hospitals' credit, according to the report. Merger activity is expected to increase “as smaller stand-alone providers come to terms with their resource limitations and trade their independence for long-term viability,” according to the report, “and as larger organizations seek to grow and strengthen their market footprints, increase contracting leverage and protect their patient bases.”
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