Home Affordable Care Act S&P Says Nonprofit Providers Are Financially Stronger

S&P Says Nonprofit Providers Are Financially Stronger

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by Robert Sheen

The Affordable Care Act, Medicaid expansion and the wave of mergers they have emergency_roomtriggered have made the nonprofit healthcare sector financially stronger, according to the Standard & Poor’s ratings agency.

S&P changed its evaluation of the sector from “negative” to “stable,” saying that it expects the outlook for providers to be positive at least through 2016.

The agency noted that AA-rated nonprofit health systems saw a $2.2 billion increase in revenues in 2014 and that providers in all rating classes generated higher revenues.

Mergers are creating larger networks of nonprofit providers which enjoy economies of scale and increased financial strength, said S&P. By contrast, stand-alone nonprofit hospitals in all credit categories saw declines in revenues.

The expansion of Medicaid under the ACA is helping non-profit providers, according to S&P, because it has substantially reduced the amount of uncompensated or “charity” care.

The sector faces “continued uncertainty,” S&P noted, because of industry-specific factors as well as “the unknown effects of political changes on state and federal health care policy due to future elections.”

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