Moody's Investors Service has published a description of its approach to rating human service providers.
The not-for-profit human service industry has grown as more governmental agencies have turned over programs to the private sector. Privatization efforts have sparked the creation of new educational, residential and vocational training programs for people with mental or physical disabilities.
New York-based Moody's expects the not-for-profit human service industry to grow "as demand for community-based treatment increases and the need for capital persists."
Because states retain the fiscal responsibility for providing care and treatment for disabled individuals, Moody's considers the state's funding mechanisms as well as the provider's creditworthiness in determining a rating.
Other factors include a provider's historical presence in the community, its competitive position, the types of services provided, the quality of the management team, the availability of other funding sources, the provider's financial performance and the legal structure of its contract with the state.
Moody's has rated four such providers: Bay Cove Human Services, Boston (B1); Vinfen Corp., Boston (Ba1); Elwyn, Media, Pa. (Baa); and Allegheny Valley School, Pittsburgh (Baa).