The ratings agency indicated that nonprofit hospital medians peaked prior to the coronavirus outbreak.
Nonprofit hospital 2020 financial medians are expected to represent 'peak performance,' according to a preview notice released by Fitch Ratings Thursday morning.
The ratings agency stated that the medians to be profiled in its 2020 median ratio report are "based on 2019 audited data and therefore do not reflect the impact of the coronavirus pandemic."
According to an Infogram graphic produced by Fitch, nonprofit hospital operating margins, EBITDA margins, and days cash on hand in 2019 all hit their highest levels in three years.
Fitch said that most nonprofit hospitals were in a strong position heading into the pandemic and were buffered by "some financial cushion to withstand pressures."
The ratings agency also stated that a financial recovery for nonprofit hospitals is unlikely until a vaccine for coronavirus disease 2019 (COVID-19) is produced.
"The NFP healthcare sector is unlikely to stabilize until an effective coronavirus vaccine is widely available. The sector has shown considerable resiliency over the years, weathering significant events such as the Great Recession and legislative changes to funding," the notice read. "However, the coronavirus presents entirely new and fundamental challenges for the sector in the short term in the form of volume and revenue disruption, and over the medium to longer term with expected deterioration of individual provider payor mixes and possible changes in the behavior of healthcare consumers. Historic sector challenges as noted above will persist and compound negative pressures over the next few years."
In early April, Fitch placed 15 nonprofit hospitals at Rating Watch Negative due to the ongoing spread of coronavirus disease 2019 (COVID-19).
Fitch stated that three main drivers for placing these health systems at Rating Watch Negative were weaker liquidity levels, weaker operating risks, and uncertainty about the effects of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the federal government's $2 trillion stimulus package.
Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.