Despite Merger Activity, Negative Credit Conditions Persist
Again, this is nothing you, as a leader in your hospital or health system, aren't already acutely aware of.
So let's not get carried away with this report. Yes, the environment is challenging. It's difficult to achieve the margins that will be needed to ensure the long-term viability of your hospital or health system.
But Moody's ratings are a tool for bond buyers to evaluate you—nothing else. While you can't do anything about the predicted earnings malaise facing healthcare in general in coming years, you can do something about your specific situation.
Some of these headline-grabbing mergers will be successful. Some will fall apart. Healthcare doesn't exactly have a stellar track record of combinations. That's where you and your colleagues can separate yourselves from the pack.
On the margin, healthcare might be a worse bet than it used to be for bond buyers. You'll have to pay slightly higher interest rates because of that perception. But beyond that, it's up to what you do.
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