Standard & Poor's said it downgraded the credit ratings of 13 not-for-profit hospital providers and raised 11 ratings in the first quarter of 2006. S&P said the ratio doesn't indicate a negative credit trend, as the agency also affirmed 112 ratings out of 142 rating actions and made 11 positive outlook revisions compared with 10 negative ones. Factors contributing to the downgrades included declining admissions, weaker profitability, increasing competition and overall deteriorating financial performance. S&P said it expects the not-for-profit hospital sector to remain stable for the year but is somewhat concerned about debt levels, interest costs and depreciation expenses that will come up when capital projects are completed.
Similarly, Moody's Investors Service said it issued more downgrades than upgrades in the first quarter, 10 versus six. But Moody's also said the higher number of downgrades did not reflect a trend for 2006. The agency affirmed 73 ratings affecting $27.5 billion in debt in the quarter, compared with 72 affirmations affecting $15.7 billion in debt, in the year-ago quarter. The change reflected four affirmations for large systems with debt over $1 billion each. Of 20 outlook revisions associated with the affirmations, 13 were favorable, Moody's said. -- by Cinda Becker