Moody’s Investors Service has issued a special comment on the unique credit advantages of small not-for-profit hospitals. Of the 540 not-for-profit hospitals that Moody’s rates, 119 (22%) are acute care hospitals with total operating revenues less than $175 million, and 38 are rated A3 or higher. Several common traits distinguish small hospitals with strong ratings, according to Moody’s.
One hallmark is the ability to command a leading or dominant market share, particularly in rural areas. In metropolitan areas, the hospital may be the only one in a suburb, and its reputation of high quality and patient service keeps individuals from seeking care elsewhere. Small hospitals with top ratings also are recognized as leaders in high-margin service lines and can attract stellar doctors. The hospitals also typically possess a good management team that understands the dynamics and potential risks of small hospitals. In addition, Moody’s notes that small hospitals with the best ratings “maintain superior operating, debt coverage, and liquidity ratios compared to larger hospitals with the same ratings.” For more information, contact Moody’s at 212-553-4067.
