Standard & Poor's

S&P downgrades for non-profit hospitals rise sharply

Anne Zieger — Wed, 27 Aug 2008 04:22:40 -0400

Standard & Poor's has taken a meat-axe to the credit ratings of not-for-profit hospitals of late. During the first six months of 2008, credit downgrades for non-profit hospitals and health systems rated by S&P almost doubled, while upgrades fell, compared with the same period during the previous year. The agency downgraded 31 not-for-profits during that six-month period, and upgraded only 11. During the same period in 2007, it downgraded 17 non-profit hospitals or health systems and upgraded 13 of them.

The agency noted that between the hospital and health systems' large capital investments, falling margins and weaker access to credit, these entities faced significant strain on operations, particularly those that were already in a compromised financial position. Meanwhile, they're faced with costly IT upgrades, quality initiatives and pay-for-performance programs, all of which are straining stand-alone facilities, S&P noted. Hospitals that did better benefited from larger size, diversified structures and leverage, analysts said.

To learn more about S&P's analysis:
- read this Modern Healthcare article (reg. req.)

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S&P to monitor non-profit hospital tech spending

Wed, 14 May 2008 06:59:58 -0400

Over the next few years, credit rating firm Standard & Poor's plans to take a much closer look at the extent to which not-for-profit hospitals keep up with their peers in making technology investments while keeping finances otherwise in order. In fact, investment in advanced medical technology will be a key factor differentiating those with good and poor credit ratings, the firm said.

That being said, a strong technology investment program won't impress S&P all by its lonesome. The firm says it's going to look carefully at whether a hospital's medical technology investments made sense and what impact they had. Generally speaking, the firm warned, it still expects that given the pressures on the industry, hospital credit downgrades probably will outnumber upgrades in 2008, and possibly into 2009.

To learn more about S&P's plans:
- read this Modern Healthcare article (reg. req.)

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MI hospital defaults on bonds, discusses selloff

Wed, 09 Apr 2008 06:59:55 -0400

Things have gotten ugly for financial managers at North Oakland Medical Center. The 178-bed hospital, which is based in Pontiac, MI, defaulted on $38.5 million in bonds issued by the Pontiac Hospital Finance Authority. The hospital lost $13.4 million from operations in fiscal 2007, and had a meager 18 days cash on hand on Dec. 31, according to Standard & Poor's. The hospital missed a January 15 bond payment, which lowered its S&P rating on the series from B to D.

Executives say that they've been squeezed by their role as a safety-net hospital, which resulted in their spending $21 million in uncompensated care over the last three years. It hasn't helped that admissions have fallen from 7,600 in 2006 to a projected 5,000 this year.

Given these conditions, North Oakland execs are in talks to sell the facility to one of several local chains, including Henry Ford Health System, Trinity Health and William Beaumont Hospitals.

To learn more about the hospital's fate:
- read this Crain's Detroit Business piece (reg. req.)

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