Tuesday, August 26, 2008

U.S. Nonprofit Hospitals Face Credit Downgrades

While the number of people without health insurance appears to be dropping (see the immediately prior post), Reuters also reports that Moody's and Standard & Poor's expects nonprofit hospital credit ratings to suffer downgrades:

U.S. nonprofit hospitals face mounting pressures that could adversely affect their bottomlines, according to reports released on Monday by Moody's Investors Service and Standard & Poor's Ratings Services.  The rating agencies cited various factors affecting the hospitals, including a weaker economy, increased debt issuance for capital projects, and higher costs associated with the collapse of the auction-rate securities market.  "We expect the number of downgrades to exceed upgrades for the rest of 2008 and probably in 2009, as business and financial challenges squeeze operating margins and weaken balance sheets," said S&P credit analyst Martin Arrick in a statement . . . Moody's meanwhile, said the weak economy will pressure patient volume growth in many markets, while increasing the amount of charity care and uncollectable patient debts.



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