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August 14, 2014

Fiscal Woes Growing for Small Nonprofit Hospitals, S&P Says

Thinning margins and declining patient volumes are raising the financial stress for small and standalone nonprofit hospitals, Reuters writes, citing a new report from credit-rating agency Standard & Poor's.

The nonprofit health-care sector is at "a tipping point where negative forces have started to outweigh many providers' ability to implement sufficient countermeasures," with hospitals' credit downgrades increasingly outpacing upgrades, S&P warned in the study released Wednesday.

With standalone medical centers already vulnerable due to physician departures, rising bad debt, and increasingly expensive employee benefits, the reduction in patient numbers is "the straw that is breaking the camel's back," said Martin Arrick, S&P's managing director. Smaller hospitals are increasingly merging with big health systems to ease the financial pressure.