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Moody’s saw the worst ra­tio of down­grades to up­grades for not-for-profit hos­pi­tal cred­its, the worst since the first half of 2009.

Moody’s In­vestors Ser­vice down­graded 12 not-for-profit hos­pi­tal cred­its in the sec­ond quar­ter com­pared with only three up­grades, the worst such ra­tio since the first half of 2009, ac­cord­ing to a spe­cial com­ment pub­lished by the bond-rat­ing agency. The to­tal value of debt out­stand­ing for the down­grades was $2.63 bil­lion vs. $1.42 bil­lion for the up­grades, mark­ing the first time that down­grades have out­paced up­grades on to­tal debt value since the third quar­ter of 2009. Moody’s noted that it af­firmed rat­ings for 81 not-for-profit hos­pi­tal cred­its in the quar­ter, rep­re­sent­ing 84% of its rat­ings ac­tiv­ity for the quar­ter and con­sis­tent with the long-term trend for the vast ma­jor­ity of rat­ings ac­tions to re­sult in no change. For the sec­ond quar­ter and the first half of 2011 as a whole, debt is­suers with $500 mil­lion in an­nual rev­enue or less were dis­pro­por­tion­ately hit with credit down­grades, Moody’s said. Such is­suers were eight of the 12 down­grades, or 67%, for the sec­ond quar­ter; and 13 of 18, or 72%, for the first half. Is­suers with less than $500 mil­lion in an­nual rev­enue are more vul­ner­a­ble to physi­cian de­par­tures, lack lever­age with in­sur­ers and lack the scale needed to drive down costs enough to main­tain mar­gins in the cur­rent en­vi­ron­ment, Moody’s said. The quar­ter’s three up­grades rep­re­sented the fewest num­ber of up­grades in the sec­tor since the third quar­ter of 2005, Moody’s said. pos­si­ble are not af­fected,” but that it’s im­por­tant to con­sider changes in later years to en­sure the pro­gram’s sus­tain­abil­ity. “What we’re not will­ing to do is re­struc­ture the pro­gram in the ways

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