Multiple hospitals and health systems have suffered downgrades to their financial ratings this year amid rising expenses, ongoing operating losses and challenging work environments.
Here are 15 hospitals and health systems that received credit rating downgrades from Fitch Ratings or Moody's Investor Service in 2024:
1. Fitch downgraded Beaver, Pa.-based Heritage Valley Health System's rating from "A+" to "A." The downgrade reflects ongoing operating and excess losses that have persisted over the past four years, Fitch said.
2. Fitch downgraded Houston-based Texas Children's Hospital's rating to "AA-" from "AA." The downgrade reflects Texas Children's "material underperformance in profitability," which is driven by multiple factors, Fitch said. Those factors include weaker than expected volumes in its Houston market, a delayed opening of a new Austin inpatient facility and operating headwinds faced by its health plan.
3. Fitch downgraded Porterville, Calif.-based Sierra View Local Health Care District's rating to "A-" from "A." The downgrade primarily reflects Sierra View's challenged financial performance since fiscal 2023, which resulted in a $16 million loss (-10.2% operating margin), Fitch said.
4. Moody's downgraded the ratings of Valhalla, N.Y.-based Westchester County Health Care Corp. and Charity Health System to "B1" from "Ba1." The downgrade of WCHCC's rating reflects a material decline in liquidity to a "very weak level concurrent with growing near-term demands on cash, increasingly high reliance on short-term bank lines, and higher-than-expected cashflow losses," Moody's said. The downgrade of CHS' rating is based on WCHCC's legal guarantee to pay debt service on CHS' bonds.
5. Fitch downgraded Marshall, Mo.-based John Fitzgibbon Memorial Hospital's rating to "CCC-" from "CCC." The downgrade reflects John Fitzgibbon's ongoing pressured operations and highlights the hospital's light liquidity position, small size, and challenging payer mix, "which provide a very low margin for safety," Fitch said.
6. Moody's downgraded Bellevue, Wash.-based Overlake's rating to "Baa2" from "Baa1." Its outlook has been revised to stable from negative. The ratings agency said the downgrade was driven by the system's weakened liquidity position and expected slow recovery of financial performance.
7. Moody's downgraded Montgomery, Ala.-based Jackson Hospital & Clinic's rating to "Caa2" from "B1." Its outlook remains negative. Moody's said the downgrade reflects its projection of Jackson's "deteriorated cash flow and financial position which has resulted in failure to make rental payments."
8. Fitch downgraded Meadowbrook, Pa.-based Holy Redeemer Health System's rating to "BB-" from "BB+." The ratings agency said the downgrade "reflects a multi-year trend of sizable operating losses that has led to a steady decline in liquidity, thereby reducing the system's financial flexibility."
9. Fitch Ratings downgraded Frederick (Md.) Health Hospital's rating to "BBB+" from "A-" after a slower than expected recovery in operating performance since fiscal year 2022. The downgrade also reflects continued operating pressure in 2024, signaling a more protracted operating improvement following a challenging 2022 and 2023
10. Fitch downgraded Roseville, Calif.-based Adventist Health's rating to "BBB+" from "A." The downgrade is primarily driven by the significant increase in leverage (about 31%) Adventist is taking on, in part to support the acquisition of two hospitals from Dallas-based Tenet Healthcare. Long-term debt is expected to increase by about $750 million once the deal closes.
11. Astoria, Ore.-based Columbia Memorial Hospital had its rating lowered to "BBB+" from "A-" by Fitch because of a weaker financial profile as a result of the hospital's issuance of its series 2024 bonds for hospital expansion efforts.
12. Fitch downgraded Palomar (Calif.) Health's rating to "BB+" from "BBB-" because of its financially challenged results over the last 18 months. The system's weaker performance was driven by various factors, including declining volumes, and heightened labor and supplies expenses that are primarily related to post-pandemic inflationary pressures.
13. Fitch downgraded Minneapolis-based Allina Health's rating from "AA-" to "A+" with its rating outlook at stable. The downgrade was driven by operating challenges Allina has faced over the last two years coupled with balance sheet metrics that are more in line with the "A+" rating.
14. Burlington, Mass.-based Tufts Medicine was downgraded from a "BBB" to a "BBB-" credit rating amid slower than expected operating improvement, including another year of "significant operating losses, coupled with a year over year decline in unrestricted cash and investments," according to Fitch.
15. Fitch downgraded Marshfield (Wis.) Clinic's rating to "BBB" from "BBB+." The downgrade reflects operational challenges connected to expenses that have not adequately flexed to variable revenues as the health system continues to integrate following a period of high growth, and higher than budgeted medical loss ratios at the health plan.