A poor economy and crisis in the financial markets put strong downward pressure on credit ratings for not-for-profit hospitals in 2008, according to a report this week by Moody's Investors Service.
Downgrades exceeded upgrades by a record 27 to 4 in the fourth-quarter as the economic downturn escalated and market volatility increased. Moody's downgraded 53 ratings for the year, the most in the not-for-profit hospital sector since 2001.
"Primary factors for the downgrades in 2008 included a combination of softer revenues due to volume declines in some of the more profitable elective procedures, increased bad debt expense with rising unemployment levels, and greater exposure to high co-pay and deductible health plans," said Deepa Patel, the report's author.
Patel said there was also a significant deterioration in liquidity positions from investment losses.