So, Moody's Investors Service has indicated that not-for-profit hospitals experienced declining financial health in fiscal year 2008. "A decline in credit measures across the board," according to Moody's vice president Brad Spielman.
The credit rating agency bases their assessment on audited financial results for 211 hospital organizations, and will issue median FY 2008 measures for its full ratings portfolio of 530 hospitals this summer.
Expect further weakening, Spielman warns.
In a slightly more positive assessment, Fitch Ratings recently said that the U.S. for-profit hospital industry's performance during the fourth quarter of 2008 was surprisingly stable in spite of the weak economy.
According to Fitch's report, "Fitch's For-Profit Hospital Industry Quarterly Diagnosis," bad debt expense and uncompensated care in 2008 actually declined versus the prior year, with several providers reporting a decline in the number of uninsured patients admitted to their facilities.
Patient volumes were not significantly worse at for-profit hospitals than during the third quarter, and admissions remained positive during the fourth quarter when adjusted for outpatient activity.
Nevertheless, Fitch believes the industry environment will be "increasingly challenging" in 2009. The agency speculates that deteriorating collections and growing numbers of uninsured patients to result in industry-wide increases in bad debt expense and uncompensated care in 2009.
As the economy continues to falter, more patients will defer or forego non-emergency treatment, the agency says.
In other hospital ratings news:
Fitch downgraded $234 million of outstanding series 2007, 2005, 2002 and 1996B bonds issued by the Norman Regional Hospital Authority (Oklahoma) to 'BBB-' and revised the outlook to Negative from Stable.
Fitch affirmed the 'AA+' rating on approximately $3.56 billion of senior revenue bonds issued on behalf of - or guaranteed by - Ascension Health, Missouri and affirmed the 'AA+' rating on approximately $599 million of Ascension Health's subordinated revenue bonds. Fitch also assigned its 'F1+' rating to approximately $2.59 billion of variable-rate demand revenue bonds and annual/multi-annual put bonds. The agency says the rating outlook remains Stable.
Fitch assigned an 'AA' rating to approximately $60 million St. Petersburg Health Facilities Authority's revenue refunding bonds (All Children's Hospital, Inc. Obligated Group), series 2009A. Fitch also affirmed the 'AA' rating on the outstanding $163 million series 2002, 2005A & B, and series 2007B bonds, all issued via the authority. The rating outlook is considered Stable.
Fitch assigned an 'AA-' underlying rating on the expected issuance of approximately $200 million of Pinellas County Health Facilities Authority's health system revenue bonds series 2009A-1, A-2, and A-3 on behalf of BayCare Health System. The rating outlook is Stable.