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The answer to “why weren’t we downgraded” is multifaceted and will depend on each hospital’s circumstances. But there are often three factors at play, including rating tolerance, the role of medians and effective messaging.

As Medicare turns 60, new challenges are on the horizon: from site-neutral reforms to payment model shifts. These challenges will be compounded by the One Big Beautiful Bill’s impact. A proactive response will help ensure that hospitals remain vital community institutions in the decades ahead.

Possible limitations on state directed payment programs could have a significant impact on many hospitals’ bottom line. Organizations should act now to model the impact and identify steps that could help mitigate it.

The impact of federal policy changes on not-for-profit healthcare was the focus of Kaufman Hall’s 2025 Spring Rating Agency update. Our panelists from Fitch, Moody’s and S&P Global discussed potential cuts to the Medicaid program, site neutral payments, the tax-exempt status of private activity bonds and tariffs and supply chain challenges.

Downgrades continued to outpace upgrades in 2024 although at a lower rate than in 2023. Many of the downgrades reflected ongoing expense pressure that exceeded revenue growth. Rating affirmations remained the majority rating action in 2024, as in prior years.

A growth strategy focused on access, accretive opportunities, and ambulatory represents a new “Triple A” for hospitals and health systems.

Midway through 2024, we are seeing a sustained trend of stronger performance. Revenue and expense trends and length of stay will be indicators for the months ahead, but for now, good planning and tough decisions are translating into better results.

The new generation of weight-loss drugs has the potential to help reduce prevalence of obesity and Type 2 diabetes, two of the most prevalent chronic conditions. How might that affect hospital operations and capital and financial planning?

Rating meetings should include a meaningful discussion of notable achievements along with a frank, no-spin discussion of the risks the organization is facing. This balance will build credibility with the rating analyst and, ultimately, the rating committee.

Steward Health Care’s recent Chapter 11 bankruptcy filing is one of the largest health system bankruptcies in recent memory. Although Steward is a for-profit system, there are important lessons that not-for-profit health system leaders can learn from the Steward bankruptcy.

While days cash on hand is a pillar liquidity ratio for healthcare, liquidity is an equally important concept. There is a difference between wealth and liquidity, and recent events have demonstrated the growing importance of the latter.

Upgrades and downgrades reflect the realities of what ratings are intended to do, which is to reflect the rating agency’s best assessment of an organization’s performance for investors. Upgrades must be earned and downgrades may happen quickly, but affirmations are most typical.