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Responses to Kaufman Hall’s 2023 “State of Healthcare Performance Improvement” report indicate ongoing concern regarding covenant challenges in 2024. Organizations need to understand the causes of covenant misses and near misses and build a durable financial plan for the future.

The number of not-for-profit hospital rating downgrades has escalated in 2023, suggesting that benefit of the doubt is running out. Hospitals will need to go the extra mile when preparing material for their rating agency meetings.

The rating committee is central to the rating process: all rating decisions are made by the committee, not an individual. In her new blog, Lisa Goldstein identifies five things to know about what happens in a rating committee.

As organizations prepare for rating agency presentations, financial performance will continue to occupy much of the agenda. But analysts also will want an update on long-term strategies as performance stabilizes and the industry resets to a new status quo.

The maintenance of financial reserves is critical in rating committee during difficult times. Management teams that have outlined a credible plan to create financial durability and have built liquidity are best positioned for today’s harsh environment.

Although hospitals have experienced difficult operating periods and volatile stock markets in the past, the simultaneous impact of these two forces in 2022 was a first in not-for-profit healthcare, creating a financial “twindemic” that drove many of the downgrades.

In recent months, hospitals of all sizes and ratings are reporting tremendous financial turbulence, primarily due to externalities such as the nursing shortage and the need for expensive contract labor.

With one out of every two hospitals expected to show an operating loss in 2022 , presentations to the rating agencies in many cases need to focus more on the turnaround plan and less on...

It’s not all bad news when it comes to not-for-profit hospital financial performance. Some hospitals and health systems are navigating labor pressures and reporting improving results.

The possibility of breached covenants is a symptom of deeper problems that require an all-hands-on-deck approach to get back on a sustainable path.

The staggering losses reported by many not-for-profit hospitals in the first quarter of 2022 showed deficits that the industry has rarely seen.

The first quarter of 2022 will undoubtedly be one of the most financially challenging periods for not-for-profit hospitals.