Another credit-rating agency is eyeing the not-for-profit healthcare sector.
Duff & Phelps Credit Rating Co., known for its ratings of managed-care companies and real estate investment trusts, just released criteria for rating not-for-profit healthcare systems. The New York-based agency hopes to build credibility with mutual funds, investment banking firms and healthcare providers through detailed market reports and, at a minimum, annual updates of any system it rates.
The goal is "to slowly build market share, one system at a time," says Ethan Parks, an assistant vice president at the agency.
Duff & Phelps will face two entrenched competitors-Standard & Poor's and Moody's Investors Service-and a third agency, Fitch Investors Service, which has made major inroads covering healthcare.
It doesn't hurt that Duff is something of a known quantity.
"Certainly they're very well respected on the for-profit side," observes Fred Hessler, co-head of Salomon Smith Barney's healthcare investment banking group. Still, it's going to be "an uphill battle and a challenge to establish a presence in the not-for-profit healthcare sector," he says.
Parks says he knows it will take time to instill confidence in the firm's ratings. "Ultimately it's sort of a chicken and egg in that the investors don't really know Duff, because municipal investors are not corporate investors," Parks concedes.
He's hoping to remedy that situation with a series of in-depth healthcare market reports. The first, an analysis of the San Diego market, is available on the firm's World Wide Web site at www.dcrco.com. Future reports will assess market dynamics in Boston, Detroit and San Francisco.