Following a national trend stemming from a slowly recovering economy, the hospital in Hopkinsville has had its credit rating downgraded, a possibility many Kentucky hospitals may be facing. "This means the hospital may have to pay a higher interest rate if it needs to borrow money in the near future," reports Nick Tabor, senior staff writer for theKentucky New Era.
Loss of business, a small revenue base and lots of debt were among the reasons Jennie Stuart Medical Center's rating dropped from BBB+ to BBB, Tabor reports. Fitch Ratings, one of the global agencies whose ratings guide investors, said uncertainty about the expansion of Kentucky's Medicaid system and how federal health reform will affect the hospital's finances were other reasons for the downgrade. The hospital has lost money in two of the last four years. Last year, it had a 1.9 percent loss.
Tabor explains there are eight ratings above the BBB level. If the facility's rating "were to slip two levels lower, to BB+, it would be on the level of 'junk bonds,' no longer considered investment grade," he reports.
There are three major rating companies in the U.S.: Fitch, Moody's and Standard and Poor's. Moody's expects downgrades of nonprofit hospitals to outnumber upgrades by the end of 2012, reports Jeffrey Young for The Huffington Post. Fitch expects the same will happen, said Senior Director Emily Wong. Smaller hospitals will especially feel the pinch since they "don't have as much ability to offset expense, inflation or reimbursement reductions," Wong said.
Since October 2011, Fitch has reviewed seven nonprofit hospitals in Kentucky. Five were affirmed, one was upgraded and Jennie Stuart was the lone downgrade. The other facilities reviewed were:
• Norton Healthcare, Louisville: affirmed at A-
Loss of business, a small revenue base and lots of debt were among the reasons Jennie Stuart Medical Center's rating dropped from BBB+ to BBB, Tabor reports. Fitch Ratings, one of the global agencies whose ratings guide investors, said uncertainty about the expansion of Kentucky's Medicaid system and how federal health reform will affect the hospital's finances were other reasons for the downgrade. The hospital has lost money in two of the last four years. Last year, it had a 1.9 percent loss.
Tabor explains there are eight ratings above the BBB level. If the facility's rating "were to slip two levels lower, to BB+, it would be on the level of 'junk bonds,' no longer considered investment grade," he reports.
There are three major rating companies in the U.S.: Fitch, Moody's and Standard and Poor's. Moody's expects downgrades of nonprofit hospitals to outnumber upgrades by the end of 2012, reports Jeffrey Young for The Huffington Post. Fitch expects the same will happen, said Senior Director Emily Wong. Smaller hospitals will especially feel the pinch since they "don't have as much ability to offset expense, inflation or reimbursement reductions," Wong said.
Since October 2011, Fitch has reviewed seven nonprofit hospitals in Kentucky. Five were affirmed, one was upgraded and Jennie Stuart was the lone downgrade. The other facilities reviewed were:
• Norton Healthcare, Louisville: affirmed at A-
• Owensboro Medicald Health System: affirmed at BBB+
• Appalachian Regional Healthcare: upgraded BB from BB-
• King's Daughters in Ashland: affirmed at A+
• Baptist Health Systems: affirmed at AA-
• St. Elizabeth Medical Center: affirmed at AA-
AA- and A-rated facilities are reviewed every two years. BBB and BBs are reviewed once a year, and B- and below-rated facilities are reviewed every six months. This type of story can be localized for any hospital. The easiest way to check ratings for hospitals in your area is to get an account at each of the three major rating companies. "These accounts are free and easy to set up," Tabor said. (Read more)
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