Nick Tabor, senior staff writer for the Kentucky New Era in Hopkinsville, found that Jennie Stuart Medical Center's rating dropped, meaning that "The hospital may have to pay a higher interest rate if it needs to borrow money in the near future." Tabor wrote.
Fitch Ratings, one of the global agencies whose ratings guide investors, said uncertainty about the expansion of Kentucky's Medicaid system and how federal health reform will affect the hospital's finances were other reasons for the downgrade. The hospital has lost money in two of the last four years. Last year, it had a 1.9 percent loss.
Tabor explains there are eight ratings above the BBB level. If the facility's rating "were to slip two levels lower, to BB+, it would be on the level of 'junk bonds,' no longer considered investment grade," he reports.
There are three major rating companies in the U.S.: Fitch, Moody's and Standard and Poor's. Moody's expects downgrades of nonprofit hospitals to outnumber upgrades by the end of 2012, reports Jeffrey Young for The Huffington Post. Fitch expects the same will happen, said Senior Director Emily Wong. Smaller hospitals will especially feel the pinch since they "don't have as much ability to offset expense, inflation or reimbursement reductions," Wong said.
AA- and A-rated facilities are reviewed every two years. BBB and BBs are reviewed once a year, and B- and below-rated facilities are reviewed every six months. The easiest way to check ratings for hospitals is to get an account at each of the three major rating companies. "These accounts are free and easy to set up," Tabor tells us. (Read more)