Cincinnati-based UC Health has suffered a credit downgrade because of what S&P Global termed "significantly escalating losses."
The downgrade from "A" to "BBB+" applies both to the system's overall rating and to specific bonds.
The escalating losses have continued through fiscal 2022 and into the first three months of fiscal 2023, the rating agency said, mainly because of elevated labor costs resulting in negative cash flow. The downgrade also reflects limited cushion from a relatively small amount of days of cash on hand and amid expectations of continued losses.
"We expect UC Health to violate its debt service coverage covenant in fiscal 2023, which would result in a consultant call-in," S&P Global further warned.
UC Health operates the University of Cincinnati Medical Center, West Chester Hospital, the UC Gardner Neuroscience Institute, the Lindner Center of HOPE, Bridgeway Pointe and University of Cincinnati Physicians, the system's 800-plus physician group. It also operates the Daniel Drake Center for Post-Acute Care, where private equity is partnering with management over operations.