Cyberattack Not Likely to Affect Credit Ratings for Not-for-Profit Hospitals

The cyberattack on Change Healthcare, which has disrupted insurance claims processes for medical institutions nationwide, is not expected to hurt the credit ratings of not-for-profit hospitals, Fitch Ratings recently announced. Change Healthcare is a billing and payment unit of UnitedHealth Group.

The ratings agency said it screened its portfolio of not-for-profit hospitals with a specific focus on those with modest liquidity who would be most affected by the revenue interruption. Agency analysts communicated with issuers to determine if they were a Change Healthcare customer and to what extent the disruption would pressure liquidity.

Insurers reported several mitigating factors that are forestalling major credit rating downgrades, such as adequate levels of balance sheet cushion for delays in cash collections, temporary cash advances from Change Healthcare and Medicare, and paper workarounds, according to Fitch. If providers have a large enough cash cushion for the duration of the event and can return to normal operations soon, Fitch said it does not expect any negative rating effects.

“In a worst-case scenario,” the agency added, “extraordinary degradation to a provider’s balance sheet, or long-term disruptions in operations, specifically billing and collection, could pose negative pressure to ratings.”

Fitch said it would continue to monitor events for potential impact on affected providers.

Reference

Change Healthcare cyber event likely a minor setback for US NFP hospitals. News release. Fitch Ratings; April 1, 2024. Accessed April 11, 2024. https://www.fitchratings.com/research/us-public-finance/change-healthcare-cyber-event-likely-minor-setback-for-us-nfp-hospitals-01-04-2024