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Economy, budget woes threaten non-profit hospitals

Reuters, July 24, 2012

The number of rating downgrades for non-profit hospitals outpaced upgrades in the first quarter of 2012, Moody's Investors Service said on Monday, adding it remains cautious about the effects of a slow economic recovery, federal deficit cutting measures and state budget pressures on the sector. The ratio of downgrades to upgrades was 1.33 to 1, Moody's said. "The increased proportion of downgrades is driven by the continued slow economic recovery, increasing pressure on state budgets, and a large and growing federal deficit that may lead to reductions in Medicare and Medicaid which translate into weak volumes and revenue declines," Moody's said in a statement, noting that it is maintaining its long-standing negative outlook on the sector.