It is well to be noted that the cyberattack against Change Healthcare is likely a minor financial setback when it comes to nonprofit hospitals, as per an April 1, 2024 report from Fitch Ratings.
The credit ratings agency does not anticipate any kind of credit impact on the sector because of the outage, in spite of Change’s status as a high-profile clearinghouse. Hospitals happened to have an adequate cushion on their balance sheets and, at the same time, have been able to execute the claims workarounds as well as receive bill waivers or advance payments from the payers.
But the credit outlook goes on to depend on providers returning to normal operations in the near term as well as holding onto enough cash so as to outlast the outage, remarked Fitch.
UnitedHealth Group, which happens to be Change’s parent company, is in the process as far as restoring services at the technology firm is concerned, thereby reporting the week ending March 30, 2024, that its largest claims clearinghouse had gone on to come back online.
Apparently, the providers have raised concerns pertaining to the financial and operational effects of the weeks-long outage, such as the payment snags, prior authorization delays, as well as the challenges of conducting eligibility checks.
Earlier, the reports from credit rating agencies such as Fitch as well as Moody’s have gone on to focus on the financial risks pertaining to smaller providers. Fitch noted in March 2024 that smaller organizations that rely heavily on Change could go ahead and take a credit hit. Those smaller companies may already have worse credit ratings along with less flexibility so as to absorb temporary cash flow disruptions, opines Fitch.
It is well to be noted that Moody’s recently found that small providers having already weak finances were the most likely to struggle throughout the outage, but that rated nonprofit as well as for-profit hospitals would go ahead and generally be able to withstand disruption.
The latest Fitch report went on to point out that nonprofits are not facing a credit downgrade. The ratings agency went ahead and screened its nonprofit hospital portfolio, emphasizing hospitals with relatively modest liquidity of 75 days of cash on hand.
Hospitals at present happen to have enough of a financial cushion, and they have been able to switch to new claims clearinghouse vendors or rather move to paper claims fairly quickly. Nonprofits have also gone on to be able to take advantage of cash advances from UnitedHealth or the CMS. UnitedHealth went on to reported in March 2024 that it had advanced more than $3.3 billion to providers thus far.
