S&P Global Ratings downgraded Honolulu-based Kuakini Health System's long term rating to "B" from "B+."
The downgrade is a result of several factors, including the health system's operating loss in fiscal year 2017, weak debt service coverage, unfavorable payer mix, highly competitive market and declining utilization trends. S&P also acknowledged the health system's primary service market is favorable in that it is sizable.
The outlook is negative.
"The negative outlook reflects our view of Kuakini's fiscal 2017 operating performance, which did not meet budget expectations, coupled with continued operating losses expected in management's 2018 budget," said Melanie Her, an S&P Global Ratings credit analyst.