Not-for-profit and public hospitals are showing signs of stability with profitability margins holding relatively steady and leverage metrics slightly improving, per our preliminary 2018 medians. The revenue growth rate edged ahead of expenses for the first time since 2015,driven by M&A, steady patient volumes and revenue cycle improvements. Cost-cutting initiatives and lower increases in drug prices contributed to a slower expense growth rate. A weak equity market in 2018 contributed to a slowdown in absolute cash growth while days cash on hand declined.
U.S. Not-For-Profit Health Care Rating And Outlook Change Drivers, First-Quarter 2019
Source: S&P Global Ratings, April 30, 2019
S&P Global Ratings performed a review of factors and how they influenced, positively or negatively, the credit profile of the U.S. not-for-profit health care providers it reviewed in the first quarter of 2019. From Jan. 1 to March 31, operating performance was a driver in 57% of the total 35 rating actions, followed by affiliations or deepened integration of already-affiliated organizations (23%), business position and utilization trends (17%), and balance sheet metrics (17%).