S&P Global Ratings doesn’t expect margin pressures to ease much next year.
S&P Global Ratings has revised its view of the U.S. not-for-profit health sector to "negative" as a result of continuing operating pressures and volatility in the investment market.
"Margins and cash flow recently have at best demonstrated limited sustainability of a post-pandemic recovery and at worst have accelerated to uncharacteristically high losses," S&P Global Ratings credit analyst Suzie Desai, said in an email release. "We do not expect full margin recovery in 2023 and will likely see continued operating losses, albeit at lower levels than 2022, for many institutions. Meaningful improvement will likely take multiple years."
Hospitals and health systems across the U.S. are expected to finish the year in the red as labor and expense challenges persist. In October, organizations saw a tenth consecutive month of hospital operating margin declines, according to a Syntellis report around hospitals' financial benchmarks. Recent Kaufman Hall data aligns with the Syntellis report.
"Heading into the final quarter of the year, hospitals and physician practices have had little reprieve during a very difficult 2022 from a financial perspective," Erik Swanson, a senior vice president of data and analytics with Kaufman Hall, said in a separate email statement. "Hospitals and physician practices could climb back into the black by the end of the year, but it is looking less and less likely as months of negative margins continue to pile up."
Amanda Schiavo is the Finance Editor for HealthLeaders.