The weak economy and tight credit continue to undermine the financial strength of not-for-profit hospitals and health systems. Moody's Investors Service lowered significantly more credit ratings than it raised among not-for-profit hospitals and health systems for the third consecutive quarter, the New York ratings agency said in a report.
Analysts dropped the credit ratings for 17 hospitals and systems with a combined $4.6 billion in debt between April and June. Meanwhile, Moody's raised the ratings for four tax-exempt health care borrowers with debt totaling $734 million.
Last quarter's margin of downgrades to upgrades for tax-exempt healthcare edged up to 4.3-to-1, compared with 3.8-to-1 in the prior three months and 6.8-to-1 in the last quarter of 2008. Factors that contributed to downgrades include weak operations, dwindling cash reserves and bonds that carry a higher risk that borrowers may be forced to rapidly pay back lenders.
Last quarter, Moody's also revised the outlooks downward for 15 not-for-profit hospitals and health systems and analysts said eight providers had improved outlooks last quarter.
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