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Bond Ratings Pressure Smaller Hospitals as NFP Sector Falters

John Commins, for HealthLeaders Media, May 1, 2013

When it comes to bond ratings, bigger is still better for not-for-profit hospitals.

Five of six not-for-profit hospitals that saw their bond rating downgraded by Moody's Investor Service in the first quarter of 2013 were smaller providers with less than $500 million in revenues, the ratings analysts said in a new report.

Lisa Goldstein, associate managing director at Moody's, concedes that the report is not breaking news.

"We have said for a while that small hospitals, as we look at them through the lens of a rating, are more vulnerable and susceptible to the changes in the industry which heretofore would go at a glacial pace. Now things are picking up," she says.

Fueling that acceleration, Goldstein says, is the looming implementation of key provisions and reimbursement models in the Affordable Care Act that take effect on Jan. 1, 2014.

"It's interesting to us that in the first quarter, five of the six downgrades were of small providers and two of the three upgrades were of more sizeable providers. The numbers are different from the first quarter of 2012 but the message is not new," Goldstein says.

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