Undetermined. Good. Fair. Serious. Critical. American Hospital Association guidelines recommend that hospitals use one of those five words to describe a patient’s health condition to the media and public. Many hospitals also throw in the word “stable” to qualify those five words as in “critical but stable.” 

Ironically, all six words—undetermined, good, fair, serious, critical, and stable—also can describe the financial condition of a hospital or health system. Some may even want to add “grave” to the list. 

How would you describe the financial condition of your hospital or health system? 

We’ll be talking about the financial outlook for hospitals this year along with how that outlook will affect access to capital and investments at this year’s Summit Elevate conference. Held April 23-25 at the Grand Hyatt Tampa Bay in Tampa, Florida, this invitation-only event is designed for healthcare CFOs and senior-level leadership.  

What better way to find out about the financial outlook for hospitals and health systems this year than to look at what the three major credit rating agencies have to say: S&P Global Ratings, Moody’s Ratings, and Fitch Ratings.  

S&P Global Ratings 

“Stable but shaky” is how S&P described its outlook for not-for-profit hospitals in 2025. Some positives behind S&P’s assessment include good revenue, continuing demand for services, easing of labor-related expenses, lower rate of inflation, and sound balance sheets. S&P said it expects reimbursement to hospitals, physicians, and clinics to rise 4.8% this year compared with 4.7% last year and 9.4% in 2023. 

“Commercial rate increases, which still might not be at the level of expense growth experienced in the past few years, and enhanced Medicaid supplemental payments have aided the improvement,” S&P said. 

The shakiness comes from a number of challenges. Among them are uncertain government funding and health policy. Think about Medicaid cuts and threats to the Affordable Care Act, which could drive up hospital and health system uncompensated care costs. Another issue is an increase in event-related challenges. They include physical, cyber, and other risks, which S&P said have become “ubiquitous.” Think about national disasters, climate-related events, and the Change Healthcare breach.  

Moody’s Ratings 

Moody’s, meanwhile, also said the financial outlook for not-for-profit hospitals and health system this year was “stable” but without the shaky part. Some of the positives behind Moody’s assessment include improved cash flow, slower growth in labor and other operating costs, and stable liquidity. 

Moody’s projects that the median operating cash flow margin will rise to 7% this year compared with 6% in 2024. Further, the agency expects that 60% of the not-for-profit hospitals it rates will have a median OCF margin exceeding 6% this year compared with 40% in 2023.  

“Strong median revenue growth of 7% in 2025 will be driven in part by higher reimbursements from commercial insurers in the mid-single-digit percentage range,” Moody’s said. 

What are some of the threats to stability? Like S&P, Moody’s cited uncertain federal and state policies, cybersecurity attacks, and environmental events. But the agency threw in a few more interesting ones for healthcare CFOs to mull. First, the U.S. Supreme Court struck down the so-called Chevron doctrine, which gave agencies, not the courts, the power to interpret federal laws. Now courts have that power.  

“Insurers, pharmaceutical companies, and patient-advocacy groups might pursue litigation that could lead to decreased reimbursements and higher costs for hospitals,” Moody’s said.  

Second, the new administration’s tough stance on immigration could affect the healthcare workforce and increase labor shortages and labor costs for healthcare providers, according to the agency. 

Fitch Ratings 

“Deteriorating” is another word hospitals and health systems often use to describe a patient’s medical condition. It’s also the word Fitch used to describe the financial condition of not-for-profit hospitals and health systems last year. But this is this year. Fitch upgraded its outlook to “neutral” from deteriorating. 

The reasons behind the upgrade include a “slow yet steady” improvement in operating profit margins, “healthy” patient volume, high liquidity, stable labor market, lower increases in labor costs, enhanced productivity, and new workforce care models.  

“Balance sheets remain robust, benefiting from improving cash flows and equity market returns,” Fitch said. 

What could make hospitals and health systems slip out of neutral? Among the things that CFOs should watch for is a weaker payor mix (more patients with Medicare and Medicaid and fewer with commercial coverage), “softening” volume, equity market losses, major health policy shifts, and the failure to continue the momentum on workforce productivity and new care delivery models. 

Do the credit rating agencies’ outlooks reflect the financial reality of your hospital or health system? What one word would you use to describe your financial condition? Let’s talk about it at this year’s Summit Elevate. 

Read more about what we’re talking about at Summit Elevate: 

• “Speak simply but carry some big numbers.”