Moody's Requiring More Data on Liquidity of Not-For-Profit Hospitals, Systems

Moody's Investors Service will require all rated not-for-profit hospitals and health systems to provide more information on their ability to convert investments into cash, according to a report by the Dallas Morning News.

Moody's will use the new information to create a liquidity ratio to show how much of a borrower's assets can be liquidated within a month, year or longer, so that lenders can know how quickly a hospital could pay its bills, if needed.

The new ratio will be used in addition to current measures of liquidity, such as days cash on hand and cash to debt.

A Moody's analyst said liquidity often is subject to uncertain market conditions, therefore categorizing investments "will better inform discussions of the liquidity risk assumed by each of our rated borrowers."

In the Dallas area, CFOs at Texas Health Resources and Baylor Healthcare System said they already comply with Moody's additional disclosure requirement.

Read the Dallas Morning News' report on liquidity.