2025 Credit and Capital Markets Outlook

This technical report presents the 2025 Credit and Capital Markets Outlook for the not-for-profit healthcare sector, highlighting the stable outlook maintained by all three major agencies for the first time since 2017. The report outlines the factors influencing this outlook, including improved cash flow and market returns, while also noting the challenges posed by a declining median of days cash on hand and the widening gap between stronger and weaker performers. It discusses potential governmental policy challenges under the new Trump administration, including possible spending cuts that could adversely affect healthcare organizations. The report details the rebound in merger and acquisition activity within the healthcare sector and the recovery of healthcare bond market volume, which increased significantly in 2024. Additionally, it emphasizes the importance of strategic long-term planning for health systems, focusing on financial performance and the emergence of alternative capitalization strategies, such as Energy as a Service partnerships and synthetic leases, as potential solutions for reinvestment in aging facilities.