Financial Outlook Deteriorating for Nonprofit Hospitals in 2022 and Beyond, Credit Rating Agency Says
In its mid-year report released this month, Fitch Ratings predicts a “deteriorating” outlook for nonprofit hospitals and health systems through the remainder of 2022 and into 2023. This is primarily driven by the “macro headwinds” of high labor costs and “generationally elevated inflation,” the credit ratings and research agency says, both of which have been more pronounced than expected.
Operating metrics have declined significantly for most health systems midway into 2022 compared to 2021, Fitch says. The agency predicts elevated labor pressures will persist even as inflation cools, and the former may remain “at a permanently higher level for the rest of 2022 and likely well beyond,” said Keith Halloran, Senior Director at Fitch, in a report sidebar. High demand for nurses—a problem that predates COVID and has since become a crisis—is a major factor contributing to high labor costs, Fitch says.
Fitch Ratings predicts a “deteriorating” outlook for nonprofit hospitals and health systems through the remainder of 2022 and into 2023.