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.

Watch our recent Rating Agency panel discussion featuring colleagues from Moody’s, Fitch and S&P. Hear the latest industry outlooks, rating activity through early 2025 and what this means for the healthcare sector.

The balance sheet serves three main purposes: as a shock absorber, financing mechanism, and profit center. By examining and engaging the full range of opportunities that balance sheet resources can contribute, organizations can enhance their long-term sustainability.

Hospitals seeking funds for capital needs are facing several challenges, which is driving interest in non-traditional financing structures, often involving real estate. Synthetic leases are one alternative, but they require a careful assessment of both their benefits and considerations that may make them a less attractive option.

RFK Jr. clears Senate panel, federal and state policy battle over transgender care comes to head in New York, Moody’s downgrades health insurer credit outlook

Of the long list of possible federal budget cuts released on January 17, the suggestion to eliminate the tax-exempt status for interest payments on municipal bonds is an item of particular concern. While it is too early to wager on any of the items on the list, the implications of this move for not-for-profit hospitals would be severe.

Despite overall industry improvements for not-for-profit health systems, the divide between stronger and weaker performers continues to increase. Other challenges to the sector include the still-challenged labor market, the continued difficult payer environment and potential policy changes from the new Trump administration.

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.

Supplemental funding programs, cybersecurity risks, and industry outlooks were the themes of this year’s Therese L. Wareham Rating Agency Panel at the 2024 Kaufman Hall Healthcare Leadership Conference.

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