Several hospitals and health systems recently had their financial ratings downgraded amid ongoing operating losses, declining investment values and challenging work environments.
Here is a summary of hospital and health system credit downgrades that Becker's has reported on since Oct. 1:
1. Fitch Ratings downgraded New York City-based Mount Sinai Hospital's default rating to "A-" amid ongoing operating weaknesses. The downgrade applies to the hospital's default rating and its revenue bond ratings on about $467 million of bonds.
2. Roseville, Calif.-based Adventist Health, a 26-hospital system, received bond downgrades from two agencies.Fitch Ratings downgraded a 2009-dated bond series long-term from "AA+" to "AA" and also downgraded its short-term rating for the bonds. S&P Global maintained its long-term rating for two separate Adventist bond series at "AA-" but downgraded the short-term grade.
3. Moody's Investor Service downgraded Cincinnati-based Bon Secours Mercy Health's long-term bond rating from "A1" to "A2." The outlook was revised to stable from negative.
4. S&P Global Ratings downgraded Memphis, Tenn.-based Methodist Le Bonheur Healthcare's rating to "A+" from "AA-" amid persistent financial challenges that could give rise to a potential future default.
5. S&P Global downgraded Honolulu-based Kuakini Health System to "CCC-" amid a challenging operational environment and slower-than-expected progress in certain asset sales.
6. St. Luke's Duluth (Minn.) saw its long-term rating on a series of bonds lowered by S&P Global to "BB+" from "BBB-" amid weaker balance sheet metrics. Lower-than-expected operating performance contributed to the downgrade, according to the rating agency.
7. Tacoma, Wash.-based MultiCare Health had ratings on a series of bonds downgraded to "A" from "A+" amid balance sheet deterioration, according to S&P Global said.
8. Franklin, Tenn.-based Community Health Systems was downgraded from "B-" to "CCC+," according to a Dec. 8 report from Fitch. Fitch said the downgrade reflects reduced EBITDA and free cash flow estimates for the for-profit system, driving the credit rating agency's near-term expectation of CHS sustaining Fitch-defined EBITDA leverage above the range appropriate for a "B-" long-term issue default rating.
9. Fitch downgraded Butler (Pa.) Health System from a "BBB" to a "BBB-" with a negative outlook. The downgrade came as a result of a "deepening operating deficit through the 2023 fiscal year," including a weaker-than-budgeted operating loss through the first quarter of fiscal year 2024.