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 eight hospitals and health systems that received credit rating downgrades since January:
1. Fitch Ratings on May 9 downgraded Frederick (Md.) Health Hospital's issuer default 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
2. Fitch on May 1 downgraded Roseville, Calif.-based Adventist Health's issuer default rating "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.
3. Astoria, Ore.-based Columbia Memorial Hospital on April 29 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.
4. Fitch on April 29 downgraded the ratings on bonds issued by Palomar (Calif.) Health 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.
5. Fitch on April 18 downgraded Minneapolis-based Allina Health's long-term ratings on bonds 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.
6. S&P Global lowered Brewer, Maine-based Northern Light Health's rating from "BBB" to "BBB-", which is considered the lowest investment grade. The downgrade reflects underlying operating performance and balance sheet metrics that did not meet expectations in fiscal 2023 coupled with a weak financial start to fiscal 2024, according to a March 21 S&P report.
7. Burlington, Mass.-based Tufts Medicine on Feb. 26 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.
8. Fitch on Feb. 26 downgraded Marshfield (Wis.) Clinic's issuer default rating as well as the ratings on revenue bonds issued 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.