Hospital debt ratings outlook is stable |
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Tue, 16 Jan 2007 20:17
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NEW YORK (AFX) - The debt-ratings outlook for both for-profit and nonprofit hospitals is stable, Moody's Investors Service said in reports and an interview on Tuesday.Moody's said that among nonprofit hospitals, downgrades outpaced upgrades last year, a trend it expects to continue into 2007, according to Lisa Goldstein, a senior vice president at Moody's. In 2006, 40 hospitals were downgraded while 30 were upgraded.In 2005, upgrades outpaced downgrades but Goldstein said that was unusual, adding that in the 14 years ended in 2006, upgrades only outpaced downgrades four times, a reflection of the industry's volatility.Increases in debt, providing more charity care, additional competition and costs associated with construction projects were the main reasons for the downgrades, Moody's said.Goldstein said that while the outlook for 2007 is stable, the three-year horizon is uncertain.In another report, Moody's said for-profit hospitals' outlook is stable as liquidity remains strong and the payment environment is solid. Moody's said it rates 10 for-profit hospital companies, which collectively have about $43 billion in rated debt outstanding.However, the industry faces challenges including rising debt and an only modest increase in the number of patients being treated.'The industry continues to be buffeted by many of the same challenges it faced in 2005 and 2006,' wrote Moody's vice president Dean Diaz in a report. 'This raises concerns that the issues represent long-term trends, tempering our outlook.'However, Diaz said that despite reports of contentious pricing negotiations with managed care companies, he still expects modest price increases over the near term and that the outlook for Medicare payments remains positive.Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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