Fitch downgrades University Health System to 'BBB,' maintains negative outlook

Fitch Ratings downgraded its rating on Knoxville, Tenn.-based University Health System to "BBB" from "BBB+." At the same time, Fitch assigned the health system its "BBB" issuer default rating.

The downgrade and assignment are a result of the health system's decline in operating profitability, which negatively affected the system's liquidity and net leverage position. Fitch favorably viewed the health system's recently completed project that added 44 beds, which will ease capacity constraints and boost its reputation as the area's sole academic medical center.

The outlook remains negative, reflecting the health system's weakened operating margins.

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