Moody's Investors Service revised its outlook for fundamental credit conditions in the US for-profit hospital sector to negative from stable, citing the potential that a protracted economic downturn could exacerbate challenges already facing the sector, such as a weakening volume trend and an increasing number of patients having trouble paying their medical bills.
"Operators are beginning to see declines in more elective procedures, signaling that individuals may be deferring non-urgent care because of either the loss of insurance or higher deductibles and co-pays," said Moody's VP/Senior Credit Officer Dean Diaz. "On the collections side, a growing contributor to bad debt expense has been the balance due from patients after insurance coverage."
While the outlook is negative, Moody's continues to believe that the U.S. for-profit hospital sector is less directly impacted by the economic environment than other corporate sectors that are tied directly to consumer spending. Rated issuers in the sector also generally have adequate liquidity in the form of cash and available revolving credit.
The Moody's Industry Outlook, titled "U.S. For-Profit Hospital Sector Outlook Revised to Negative from Stable," is available on www.moodys.com (subscription required).
