The agency also downgraded twice as many providers as it upgraded (six compared with three). Of the systems that were upgraded, two had annual revenue topping $500 million, are considered dominant in their respective markets and are bucking the trend of shrinking patient volume.
Small hospitals are particularly vulnerable in a challenging operating environment, Moody's said, because they have less leverage with payers and suppliers and fewer areas where they can gain economies of scale, and they rely on a few key physicians who would cause staffing holes if they left.
Moody's also highlighted struggles with integrating health IT investments as straining resources at two downgraded systems: Wake Forest Baptist Medical Center, Winston-Salem, N.C., and Citrus Memorial Hospital, Inverness, Fla.
The other four downgraded hospitals were Helen Keller Hospital, Sheffield, Ala.; East Jefferson General Hospital, Metairie, La.; Adena Health System, Chillicothe, Ohio; and Ohio Valley General Hospital, McKees Rocks, Pa.
The upgraded hospitals were El Camino Hospital District, Mountain View, Calif.; Overlake Hospital Medical Center, Bellevue, Wash.; and the University of Wisconsin Hospital and Clinics, Madison.
The healthcare industry is coming off a year in which Moody's downgraded a record amount of debt, $20 billion, compared with the $6.4 billion in debt that it upgraded.
And Moody's says it sees no evidence that the outlook will improve for not-for-profit healthcare providers, with downgrades expected to outpace upgrades even into 2014. In the fourth quarter of last year, Moody's similarly downgraded twice as many providers (10) as it upgraded (five), citing increasing debt loads, declining liquidity and increased competition.
Follow Beth Kutscher on Twitter: @MHbkutscher