For-profit hospital companies are likely to pursue financial strategies that boost returns to stockholders in 2007 at the expense of the chains creditworthiness, Moodys Investors Service said in a new report. Pointing to the $33 billion leveraged buyout of HCA, Moodys said the for-profit chains are under increasing pressure to improve returns to stockholders, even as bad debt and rising operating costs squeeze profit margins. Companies are likely to pursue strategies that are financed with debt, such as stock buybacks or leveraged buyouts, increasing the likelihood of defaults, Moodys said. The bond-rating agency also said it expects that competition from alternate-site providers will continue to hurt volume growth at hospitals, but it sees positive managed-care and Medicare reimbursement trends for 2007. -- by Vince Galloro
Moodys sees for-profits adding debt
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