Moody's: Distressed public hospitals burdened by board turnover, regulations

Public hospitals many times have more cumbersome governance structures than private hospitals, which can have negative credit implications, according to a recent report by Moody's Investors Service.

Public hospital boards are typically made up of publicly elected or government-appointed individuals. With elections usually taking place every four years, board membership can change suddenly and cause a swift change in the organization's strategic direction, according to the report.

The report provided the recent example of Lancaster, Calif.-based Antelope Valley Healthcare District, which was downgraded in September to "Ba3" negative form "Ba2" negative. The rating downgrade was based on several factors, including AVHD's unstable governance, which led to the unexpected termination of its CEO.

Public hospitals are also subject to public disclosure requirements that can prolong financial distress. For example, public hospitals are subject to laws that require open board meetings, and in some cases community hearings, before they can join with another entity through a merger or acquisition. These regulations can hold up or lengthen negotiations with potential partners.  

More articles on healthcare finance:

San Antonio hospital shuts down
Denver-area hospitals see profit margins soar
5 healthcare CFOs in the headlines

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Featured Whitepapers

Featured Webinars