In the second quarter of 2012, Moody's Investors Service recorded 12 credit downgrades within the non-profit hospital sector compared with nine upgrades, and the amount of downgraded debt also exceeded the dollar amount of upgraded debt.
While Moody's did forecast the number of downgrades would outpace upgrades, the amount of downgraded debt for non-profit hospitals ($2.78 billion) versus upgraded debt ($2.11 billion) went against previous trends. Upgraded debt had exceeded downgraded debt in eight of the past 13 quarters, but many of the upgrades were for larger health systems that carry more debt.
"The increased proportion of downgrades were driven by the continued slow economic recovery, increasing pressure on state budgets and a large and growing federal deficit," said Carrie Sheffield, an associate analyst at Moody's. "The deficit problem may lead to reductions in Medicare and Medicaid, which translate into weak volumes and revenue declines for hospitals."
In the second quarter, Moody's also recorded 84 total affirmations. Six hospitals had positive affirmations, five had negative, and four hospitals had ratings under review.
For the first half of 2012, Moody's reported 23 downgrades and 20 upgrades, but the $4.86 billion of upgraded debt outweighed the $4.22 billion of downgraded debt.
While Moody's did forecast the number of downgrades would outpace upgrades, the amount of downgraded debt for non-profit hospitals ($2.78 billion) versus upgraded debt ($2.11 billion) went against previous trends. Upgraded debt had exceeded downgraded debt in eight of the past 13 quarters, but many of the upgrades were for larger health systems that carry more debt.
"The increased proportion of downgrades were driven by the continued slow economic recovery, increasing pressure on state budgets and a large and growing federal deficit," said Carrie Sheffield, an associate analyst at Moody's. "The deficit problem may lead to reductions in Medicare and Medicaid, which translate into weak volumes and revenue declines for hospitals."
In the second quarter, Moody's also recorded 84 total affirmations. Six hospitals had positive affirmations, five had negative, and four hospitals had ratings under review.
For the first half of 2012, Moody's reported 23 downgrades and 20 upgrades, but the $4.86 billion of upgraded debt outweighed the $4.22 billion of downgraded debt.
More Articles on Hospital Upgrades and Downgrades:
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Moody's: 1Q of 2012 Shows Even Mix of Hospital Upgrades, Downgrades