Change Cyberattack Likely ‘minor Setback’ For Nonprofit Hospitals: Fitch

Dive Brief:

• The cyberattack against Change Healthcare is likely a minor financial setback for nonprofit hospitals, according to a Monday report from Fitch Ratings. 
• The credit ratings agency doesn’t anticipate any credit impact to the sector due to the outage, despite Change’s status as a high profile claims clearinghouse. Hospitals have adequate cushion on their balance sheets and have been able to implement claims workarounds and receive bill waivers or advance payments from payers.
• But the credit outlook depends on providers returning to normal operations in the near term and holding onto enough cash to outlast the outage, Fitch said. 

Dive Insight: 

Change’s parent company UnitedHealth Group is in the process of restoring services at the technology firm, reporting last week that its largest claims clearinghouse had come back online.

Providers have raised concerns about the financial and operational impact of the weeks-long outage, including payment snags, prior authorization delays and challenges conducting eligibility checks. 

Earlier reports from credit ratings agencies like Fitch and Moody’s Ratings have focused on the financial risks to smaller providers. Fitch noted last month smaller organizations that rely heavily on Change could take a credit hit. Those smaller companies may already have worse credit ratings and less flexibility to absorb temporary cash flow disruptions, Fitch said.

Moody’s recently found small providers with already weak finances were most likely to struggle during the outage, but that rated nonprofit and for-profit hospitals would generally be able to withstand the disruption. 

The latest Fitch report said nonprofits aren’t facing a credit downgrade. The ratings agency screened its nonprofit hospital portfolio, focusing on hospitals with “relatively modest liquidity” of 75 days cash on hand.

Hospitals currently have enough of a financial cushion, and they’ve been able to switch to new claims clearinghouse vendors or move to paper claims fairly quickly. Nonprofits have also been able to take advantage of cash advances from UnitedHealth or the CMS. UnitedHealth reported last month that it had advanced more than $3.3 billion to providers so far.