S&P downgrades for non-profit hospitals rise sharply

Standard & Poor's has taken a meat-axe to the credit ratings of not-for-profit hospitals of late. During the first six months of 2008, credit downgrades for non-profit hospitals and health systems rated by S&P almost doubled, while upgrades fell, compared with the same period during the previous year. The agency downgraded 31 not-for-profits during that six-month period, and upgraded only 11. During the same period in 2007, it downgraded 17 non-profit hospitals or health systems and upgraded 13 of them.

The agency noted that between the hospital and health systems' large capital investments, falling margins and weaker access to credit, these entities faced significant strain on operations, particularly those that were already in a compromised financial position. Meanwhile, they're faced with costly IT upgrades, quality initiatives and pay-for-performance programs, all of which are straining stand-alone facilities, S&P noted. Hospitals that did better benefited from larger size, diversified structures and leverage, analysts said.

To learn more about S&P's analysis:
- read this Modern Healthcare article (reg. req.)

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