While reforms tied to the Affordable Care Act have most healthcare providers focusing on quality and efficiency, financial experts say the dramatic change in business model is driving improvement in credit ratings. But worries still persists about just how stable those changes are.
According to Martin Arrick, a managing director at Standard and Poor’s, said a number of factors are affecting ratings trends, although the outlook in general appears to improving. S&P had been negative on the healthcare sector a couple of years ago, mostly because of pressure on operating margins, but that outlook has since reverted back to stable.
“We still see pressure on operating margins, but there are two big things,” said Arrick. “One is that hospitals have done a good job containing costs and keeping their margins generally solid. Two is Medicaid expansion.”
HENRY KOTULA 