S&P says U.S. not-for-profit healthcare sector is stabilizing

Standard & Poor's Ratings Services believes the U.S. not-for-profit healthcare sector has begun to stabilize after a very difficult period.

In a report released Thursday, the New York-based ratings firm indicated that it expects its ratings and outlooks will likely stabilize in 2010.

"While the recession contributed to many downgrades and weaker median financial ratios, based on current financial results, the sector is showing signs of stabilization and this has led to more positive rating actions recently," said Standard & Poor's credit analyst Martin Arrick. "While we believe many questions remain about the longer-term health of the sector, including significant uncertainties about the future of healthcare reform in the wake of the recent failure to pass major legislation, the sector's performance is rebounding from last year's weakest moments. But current stabilization for our rated providers is at levels generally below prior peaks."

Arrick said credit stabilization in the healthcare sector began in the 2009 fourth quarter and has continued through early 2010 with an increase in upgrades and favorable outlook revisions to stable from negative or to positive in some cases.