In 2012, Moody's Investors Service downgraded $20 billion in non-profit hospital and health system debt — a 213 percent increase from 2011 and the highest amount of downgraded debt since Moody's started tracking the data in 1995, according to a new report from the credit rating agency.
The amount of downgraded debt for non-profit hospitals and other healthcare providers was also more than double the $9.7 billion of upgraded debt. Carrie Sheffield, a Moody's associate analyst, said the large downgrade figures were attributable to declines in patient volume and weak revenue growth.
"The downgrades were also driven by declines in liquidity, more competition, increased debt load and many hospitals faced management and governance issues and pressures on pension funding," Ms. Sheffield added.
Three large health systems contributed to more than half of the downgraded debt in 2012. Roughly $13 billion of the downgraded debt was spread among Englewood, Colo.-based Catholic Health Initiatives, San Francisco-based Dignity Health and New York City-based Memorial Sloan-Kettering Cancer Center.
Moody's also found that credit downgrades for non-profit hospitals and health systems outnumbered upgrades 40 to 38. Both credit rating tallies were higher in 2012, compared with 23 upgrades and 34 downgrades in 2011.
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