Moody's: Nonprofit hospital downgrades will prevail

The downgrades for not-for-profit hospitals by Moody's Investors Service outpaced upgrades by a significant margin during the first quarter of 2012, Reuters reported.

According to Moody's, the number of downgrades outpaced upgrades by a ratio of 1.33 to 1. Altogether, Moody's reported a downgrade of $2.78 billion in debt, compared to $2.11 billion in upgrades.

In eight of the last 13 quarters, Moody's had assigned debt upgrades, according to the rating agency.

"The increased proportion of downgrades is driven by the continued slow economic recovery, increasing pressure on state budgets, and a large and growing federal deficit that may lead to reductions in Medicare and Medicaid which translate into weak volumes and revenue declines," Moody's said in a statement Monday.

Those hospitals that experienced upgrades did so primarily due to strong management, increases in state revenues or as the result of mergers with stronger partners, Reuters noted.

Moody's predicted earlier in the year that the current financial environment would encourage mergers, The New York Times reported.

Moody's expects downgrades to continue to hold sway for the foreseeable future, with most hospital debt currently under review likely to receive negative ratings.

For more:
- here's the Reuters article
- read the Moody's statement
- check out the New York Times article

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