Seven things to know:
1. There were 95 health system downgrades across Fitch, Moody’s and S&P in 2024, down from 116 in 2023, according to the report.
2. There were 37 upgrades in 2024, up from 33 in 2023.
3. Kaufman Hall Managing Director Lisa Goldstein said in the report that many of the downgrades in 2024 reflected ongoing expense pressure that exceeded revenue growth. Other downgrades reflected outsized increases in debt to fund growth strategies.
4. Most of the upgrades reflected mergers of lower-rated hospitals into higher-rated systems, Ms. Goldstein said. Other upgrades reflected improved financial performance and stable or growing liquidity.
5. Many of the downgrades were concentrated in two areas: California and the Pacific Northwest, and New York and Pennsylvania, according to the report.
6. Rating affirmations represented the majority of rating actions in 2024, as has been the case in recent years.
7. Kaufman Hall expects downgrades to outpace upgrades again in 2025, “given a growing reliance on government payers, labor challenges and a competitive environment.” The firm also said that policy and funding changes will “cast uncertainty into the mix in 2025 and may cause credit deterioration in future years.”
Read the full report here.
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