Not-for-profit hospitals and health systems that received credit upgrades in the past 13 months from one New York ratings agency had moved to preserve cash during the prior year's credit and economic turmoil.
Not-for-profits' moves to preserve cash are noted
In a newly released report, Moody's Investors Service noted many of the 20 healthcare borrowers upgraded by the ratings agency since October 2008 saw operations and balance sheets improve. Increased outpatient volume, cost-cutting and billing, and collection efforts contributed to gains, as did cuts to capital spending. Moody's downgraded 76 hospitals and health systems during the same period, though downgrades have slowed each quarter since the final three months of 2008, when 27 healthcare borrowers saw ratings drop.
Hospitals and health systems with more than $250 million in net patient revenue were more likely to be upgraded and one out of four with improved credit reported more than $1 billion in net patient revenue.
Two healthcare borrowers were upgraded into investment grade from speculative grade. Six saw their ratings adjusted upward to mid-investment grade from the bottom tier of investment grade. None were upgraded to high investment grade. Several healthcare borrowers with upgrades also finished capital projects without overrunning budgets and expanded existing or new services, according to the report. Moody's analysts also credited good governance and management for the gains.
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