This audio is automatically generated. Please let us know if you have back.
Diving brief:
- THE cyberattack against Change Healthcare is likely a minor financial setback for nonprofit hospitals, according to a report released Monday by Fitch Ratings.
- The credit rating agency does not anticipate any impact on industry credit from the outage, despite Change's status as a leading claims clearinghouse. Hospitals have adequate margin of safety in their balance sheets and have been able to implement claim workarounds and receive bill waivers or advance payments from payers.
- But the credit outlook depends on suppliers returning to normal operations in the near term and maintaining enough liquidity to survive the outage, Fitch said.
Dive overview:
Change's parent company, UnitedHealth Group, is restoring the tech company's services, reporting last week it was the largest clearinghouse for claims information had come back online.
Suppliers have increased concerns about financial and operational impact weeks of outage, including payment issues, pre-authorization delays, and difficulty completing eligibility checks.
Previous reports from credit rating agencies like Fitch and Moody's Ratings have focused on financial risks for smaller suppliers. Fitch noted last month small organizations that rely heavily on change could take a hit to credit. These smaller companies may already have lower credit ratings and less flexibility to absorb temporary cash flow disruptions, Fitch said.
Moody's recently found small providers with already fragile finances were most likely to experience difficulties during the outage, but hospitals classified as nonprofit and for-profit would generally be able to withstand the disruption.
The latest Fitch report said Nonprofits do not face credit deterioration. The rating agency examined its nonprofit hospital portfolio, focusing on hospitals with “relatively modest liquidity” of 75 days of cash flow.
Hospitals currently have sufficient financial cushion and have been able to pivot relatively quickly to new clearinghouse providers or move to paper claims. Nonprofit organizations were also able to benefit from cash advances from UnitedHealth Or the CMS. UnitedHealth reported last month that it has advanced more than $3.3 billion to providers so far.