NEW YORK - The U.S. not-for-profit health care sector's credit quality should remain stable this year but providers will face tougher conditions following 2011's improved performance, Standard & Poor's Ratings Services said in a report released Wednesday.

"The rating stability we project for 2012 reflects the financial cushion many providers have rebuilt since the recession as a result of successful cost containment and benefits from mergers and acquisitions, combined with health care reform readiness initiatives," said Standard & Poor's credit analyst Martin Arrick. "Yet, we question the sustainability of these results as we believe that 2011 and 2012 represent the top of the current credit cycle."

Standard & Poor's believes that credit quality and ratings will be negatively affected, perhaps as early as 2013, due to an increasingly difficult operating environment, according to the report. Conditions include tighter revenues, weaker payor mixes, generally declining to at best stable inpatient volume trends, the lingering impact of the recent recession, and health reform.


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