No more matrix at Moody's

Moody's Investors Service said no rating changes are expected to follow its newly released credit-rating methodology for not-for-profit hospitals.

The rating agency replaced its 2008 rating matrix with a new rating scorecard, according to a newly released report. The switch seeks to more clearly convey certain rating factors for market position, operating performance, balance sheets and capital plans in a grid.

“The quantitative grid represents a balance between greater complexity that would result in grid-indicated ratings that map more closely to actual ratings and simplicity that enhances a transparent presentation of the factors that are typically most important for ratings in this sector,” the report said.

Governance, management, debt structure and legal covenants are also considered by analysts, which are included in the scorecard but not the scorecard's quantitative grid.

“Based on historical rating practice and our opinion regarding the impact management and governance and debt structure has on credit quality, our evaluation of these factors can result in up to a three-notch rating differential from the output of the quantitative grid. These factors provide equal, if not greater, insight into the long-term credit quality of a hospital,” the report said.

About 530 not-for-profit hospitals with $181 billion in outstanding debt carry Moody's credit ratings.

You can follow Melanie Evans on Twitter: @MHmevans.