Moody's Investors Service's downgraded a historic $20 billion in nonprofit healthcare debt in 2012, compared with a $6.4 billion downgrade in 2011, it announced yesterday.
Moody's attributed the downgrades to declining patient volume and weak revenue growth last year. In addition to pressures on pension funding, more competition and general increased debt, the financial analysis agency also cited hospitals' management and governance issues.
"I hate to admit this, but hospitals generally are not that well-run," Jan Jennings, CEO of consulting company American Healthcare Solutions in Pittsburg, told Trib Total Media. "Things on the healthcare scene are very ugly."
Three health systems were largely responsible for the downgraded debt: California's Dignity Health, Colorado's Catholic Health Initiatives and New York's Memorial Sloan-Kettering Cancer, Moody's said.
Nonprofit hospitals may be particularly vulnerable with federal deficit reduction talks focused on Medicaid funding, which is the largest source of revenue for most nonprofit hospitals.
Moody's anticipates more downgrades in 2013, although the consolidation trend may affect finances this year.
For more information:
- check out Moody's announcement and report (subscription required)
- read the Trib Total Media article
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