In 2011, Moody's Investors Service issued downgrades to 34 hospitals compared with 23 upgrades, marking the sixth consecutive year in which downgrades outnumbered upgrades, according to a recent Moody's report.
However, Moody's reported there was an overall decline in rating volatility (57 rating changes in 2011 compared with 84 in 2010) that had not been seen in more than 10 years. The lower overall number of downgrades was attributed to benefits from expense reductions, improved balance sheet management, benefits from several new provider fee programs in different states and increased consolidation, according to the report.
Other highlights from the report include the following:
• Upgraded debt ($5.9 billion) was only slightly less than downgraded debt ($6.4 billion).
• There were 289 rating affirmations, which accounted for 84 percent of all rating activity.
• Of those 289 affirmations, 51 had positive outlook changes, and 24 had negative outlook changes.
Moody's expects downgrades will outpace upgrades once again in 2012 due to accelerating payor pressures and potentially flat revenue growth.
However, Moody's reported there was an overall decline in rating volatility (57 rating changes in 2011 compared with 84 in 2010) that had not been seen in more than 10 years. The lower overall number of downgrades was attributed to benefits from expense reductions, improved balance sheet management, benefits from several new provider fee programs in different states and increased consolidation, according to the report.
Other highlights from the report include the following:
• Upgraded debt ($5.9 billion) was only slightly less than downgraded debt ($6.4 billion).
• There were 289 rating affirmations, which accounted for 84 percent of all rating activity.
• Of those 289 affirmations, 51 had positive outlook changes, and 24 had negative outlook changes.
Moody's expects downgrades will outpace upgrades once again in 2012 due to accelerating payor pressures and potentially flat revenue growth.
Related Articles on Hospital Credit Ratings:
Moody's: New Boston-Area Contracts Credit Negative, Oklahoma Provider Fees Positive
7 Hospitals and Health Systems Receive Credit Downgrades in Past Month
Fitch: For-Profit Hospitals to Experience Weak Operating Trends in 2012