Revenue Can't Fix Bad Metrics; Only Strategy Can

In the business of healthcare, it's hard to escape the reality of reduced profitability as far as the eye can see. That dour outlook is being reflected in the bonds of nonprofit healthcare organizations. If you owe money to an individual or institution, they like to keep a close eye on the general health of the business, in addition to the individual market in which you operate.

And based on their calculations, all is not well.

A report this week from Moody's Investors Service revealed that 2012 was a record year in terms of the amount of hospital and health system debt downgraded. At $20 billion of nonprofit healthcare debt downgraded, 2012 represents the highest amount of downgraded debt since Moody's started tracking the metric in 1995, and is more than double the amount of upgraded debt (which is reflected in improving business trends).

Granted "since 1995," is not a long history. Also, the report is loaded with caveats. Three large systems accounted for more than half the downgraded debt, so the record amount of downgraded debt is, by itself, not necessarily a harbinger of hard times.