9 hospitals, health systems recently hit with rating downgrades

Several hospitals and health systems recently had their financial ratings downgraded amid ongoing operating losses, declining investment values and challenging work environments.

Here is a summary of hospital and health system credit downgrades that Becker's has reported on since Oct. 1: 

1. Fitch Ratings downgraded New York City-based Mount Sinai Hospital's default rating to "A-" amid ongoing operating weaknesses. The downgrade applies to the hospital's default rating and its revenue bond ratings on about $467 million of bonds.

2. Roseville, Calif.-based Adventist Health, a 26-hospital system, received bond downgrades from two agencies.Fitch Ratings downgraded a 2009-dated bond series long-term from "AA+" to "AA" and also downgraded its short-term rating for the bonds. S&P Global maintained its long-term rating for two separate Adventist bond series at "AA-" but downgraded the short-term grade.

3. Moody's Investor Service downgraded Cincinnati-based Bon Secours Mercy Health's long-term bond rating from "A1" to "A2." The outlook was revised to stable from negative.

4. S&P Global Ratings downgraded Memphis, Tenn.-based Methodist Le Bonheur Healthcare's rating to "A+" from "AA-" amid persistent financial challenges that could give rise to a potential future default. 

5. S&P Global downgraded Honolulu-based Kuakini Health System to "CCC-" amid a challenging operational environment and slower-than-expected progress in certain asset sales.

6. St. Luke's Duluth (Minn.) saw its long-term rating on a series of bonds lowered by S&P Global to "BB+" from "BBB-" amid weaker balance sheet metrics. Lower-than-expected operating performance contributed to the downgrade, according to the rating agency. 

7. Tacoma, Wash.-based MultiCare Health had ratings on a series of bonds downgraded to "A" from "A+" amid balance sheet deterioration, according to S&P Global said.

8. Franklin, Tenn.-based Community Health Systems was downgraded from "B-" to "CCC+," according to a Dec. 8 report from Fitch. Fitch said the downgrade reflects reduced EBITDA and free cash flow estimates for the for-profit system, driving the credit rating agency's near-term expectation of CHS sustaining Fitch-defined EBITDA leverage above the range appropriate for a "B-" long-term issue default rating. 

9. Fitch downgraded Butler (Pa.) Health System from a "BBB" to a "BBB-" with a negative outlook. The downgrade came as a result of a "deepening operating deficit through the 2023 fiscal year," including a weaker-than-budgeted operating loss through the first quarter of fiscal year 2024.

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