CHICAGO -- Moody's Investors Service assigned more rating upgrades to health-care revenue bonds than downgrades during the third quarter, countering a trend of the past several years.
In the third quarter, Moody's raised four ratings representing a total of $279.8 million of debt and cut one rating on $105 million of debt, according to a press release.
John Goetz, vice president and assistant director of the health-care ratings group at Moody's, said that he believes that the third-quarter results were an "aberration" given that downgrades have outpaced upgrades over the last several years. Goetz pointed out, however, that in three of the last four quarters upgrades have surpassed downgrades.
So far this year, Moody's has upgraded 16 health-care ratings, downgraded nine, and affirmed or given initial ratings to 192 other credits.
Goetz said that Moody's expects downgrades to predominate in the long term due to increased market competition, institutional overcapacity, and reductions in government and private reimbursements to many health-care facilities. He said that national health-care reforms will reinforce the long-term negative trend.
During the third quarter, Moody's confirmed or assigned first-time ratings to 51 other health-care bond issues representing $3.4 billion of debt. The rating agency assigned triple-A insured ratings to 67 health-care issues representing $3.4 billion of debt.
Moody's upgraded bond ratings in the third quarter for OSF Healthcare System in Peoria, Ill., to Al from A; Michigan Health Care Corp. in Detroit, to B1 from B; St. Catherine Hospital in Garden City, Kan., to Baa from Bal; and W.A. Foote Memorial Hospital in Jackson, Mich., to A1 from A.
Goetz said that the ratings were upgraded because of a general improvement in the financial health of the institutions. Goetz said that while Michigan Health Care and St. Catherine Hospital have improved their finances, the upgrades do not reflect major financial turnarounds.
In the third quarter, Moody's cut the bond rating for Hospital of the Good Samaritan in Los Angeles to A from A1 primarily due to a decrease in patient volume, Goetz said.Hospital Ratings Assigned Year to Date, 1993 Ratings Ratings Others TotalQuarter Upgraded Downgraded Assigned AsssignedFirst 6 0 52 58Second 6 8 89 103Third 4 1 51 56Year to Date 16 9 192 217Source: Moody's Investors Service