According to a report released Wednesday from Standard & Poor's Rating Services, small and stand-alone nonprofit hospitals are facing mounting pressure from weak operating margins and lower patient volumes, with more signals of stress on the way.
The rating agency warned the healthcare sector was at, "a tipping point where negative forces have started to outweigh many providers' ability to implement sufficient countermeasures." Beginning in 2013 and continuing into this year, credit downgrades outpaced upgrades at an accelerating rate.
Stand-alone providers are under greater pressure from physician departures, rising bad debt and higher employee benefit costs. To shoulder the challenges, smaller providers have increasingly sought out mergers with larger health systems in order to seek scale and offset increasing operating pressures. Larger healthcare organizations can better leverage their scale with vendors and insurers, eliminate duplicate services, absorb major IT project costs, as well as attract top management and physicians. Read the article in Reuters here.
