Healthcare In Crisis: Outlook for Not-for-Profit Healthcare Sector Changed to Negative from Stable

Tuesday, November 25, 2008

Outlook for Not-for-Profit Healthcare Sector Changed to Negative from Stable

Moody's Investors Service has changed the outlook to negative from stable for the U.S. not-for-profit healthcare sector as disruptions in the credit and liquidity markets have worsened and the prospects of a protracted recession have increased. The change was announced in an outlook report that updates a similar report issued in September and expresses the credit agency's expectations for the fundamental credit conditions in the industry over the next 12 to 18 months.

"While most hospitals showed resiliency when initial economic weakening began in late 2007, we have begun to see in recent months greater-than-anticipated erosion in performance and liquidity," said Moody's Senior Vice President Lisa Goldstein, author of the report. "Volumes are softening, particularly in surgical cases, also contributing to financial performance declines. Likewise, the ongoing credit crisis, culminating in limited access to the capital markets in recent weeks, is also a factor. The tax-exempt debt market is a primary source of funding for not-for-profit hospitals."

For most hospitals, Goldstein said, sound management decisions about operating costs and capital investments coupled with skilled oversight and direction from hospital boards will be of special importance over the next year or two.

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Statistics Collection

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