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COMMENTS

U.S. Not-For-Profit Health Care Rating Actions, 2020 Year-End Review

COMMENTS

Pension Spotlight: Risk Sharing Dilutes Pension Burden For Five States

COMMENTS

Credit Conditions: U.S. Regions' Economies Perk Up As The Pandemic's Impact Ebbs

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U.S. State Ratings And Outlooks: Current List

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History Of U.S. State Ratings


U.S. Not-For-Profit Health Care Rating Actions, 2020 Year-End Review

S&P Global Ratings' U.S. not-for-profit health care outlook and rating actions in 2020 were heavily influenced by the pandemic with a higher than typical amount of unfavorable outlook revisions (mostly to negative from stable), particularly in the spring when we simultaneously revised outlooks on 42 health care organizations in anticipation of upcoming financial and operating pressures. In addition, in 2020 we downgraded four times more organizations than we upgraded. Four of the nine upgrades occurred in January before the pandemic with all but one of the remaining upgrades due to affiliation or merger with a higher rated organization.

Nevertheless, we maintained a majority of our ratings, reflecting financial flexibility from strong balance sheets, enterprise profile strengths, and governmental support through stimulus funds. There have also been some favorable outlook actions including credits that were revised back to stable after having outlooks revised to negative as part of our multi-credit rating action in April 2020 when we believed those credits with weaker reserves and credit characteristics could face relatively more pandemic related challenges.

The health care portfolio is composed largely of stand-alone hospitals (59%) and health care systems (35%) with the remaining ratings on long-term care, human service providers and a physician group practice. Relative to their percentage of the total portfolio, the stand-alone providers had a higher number of downgrades and unfavorable outlook revisions in 2020. However, stand-alone hospitals also accounted for over three-quarters of the favorable outlook revisions. We believe this reflects the continued bifurcation of credit quality for stand-alone providers and the larger portfolio of stand-alone ratings. Health care systems were not immune to credit actions either as they experienced upgrades, downgrades, and both unfavorable and favorable outlook actions, although in each category at a rate lower than their percentage representation in the overall portfolio. We believe this reflects system benefits, including size, scale, and for many, centralized control, all of which provided benefits in managing through the pandemic.

The 'A' category is the largest rating category for both our stand-alone hospitals and health care systems. However, while almost all the health care systems outside the 'A' category are in the 'AA' category, stand-alone provider ratings skew to the 'BBB' and speculative grade categories. The rating downgrades were spread across all categories and although there were only four downgrades on credits rated in the 'AA' category, they were all large health care systems. The remaining downgrades occurred fairly evenly on ratings in the 'A' and 'BBB' categories; there were somewhat fewer speculative grade downgrades.

Chart 1

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Table 1

U.S. Not-For-Profit Health Care Rating Action Summary, 2020
First Quarter Second Quarter Third Quarter Fourth Quarter Total
Rating initially assigned 1 1 2 1 5
Rating raised 6 1 0 2 9
Rating lowered 8 14 7 7 36
Favorable outlook revision 5 3 14 6 28
Unfavorable outlook revision 10 52 6 6 74
Total 30 71 29 22 152

We rate health care organizations in every state, although most of our ratings are in the Midwest and Southeast. The shapes of the rating distributions for the Northeast and the West regions generally resemble a bell curve whereas the rating distributions for the Southeast, Midwest, and Southwest exhibit positive skew. This is because characteristics of each region can materially affect ratings due to differences in demographic trends, payer mix, third party reimbursement, and clinical practices.

Consistent with the ratings distribution for the entire health care portfolio where the 'A' category ratings are most frequent, four of the five regions have most of their ratings in the 'A' category. The exception is the Southwest region where almost half of the ratings are in the 'AA' category. Ratings in the Southeast have the lowest potential volatility with 82% stable outlooks at the end of 2020. The Midwest has the highest percent of ratings in the 'AA' and 'A' categories and the fewest speculative grade ratings. The Northeast region has about one-third of its ratings in the 'BBB' category, which is higher than any of the other regions, and no positive outlooks. The West has the highest percent of negative and positive outlooks as well as speculative grade ratings.

Chart 2

image

As we move through 2021, we are watching volume trends, virus and vaccine rates, the economy, and the rate of recovery for margins and cash flow. We recognize that broad-based government support, strong leadership through the pandemic, and a generally quick rebound in volume for most providers is moving the sector toward more stability relative to spring 2020. However, we believe there is still broad-based rating pressure that will continue through 2021 (see "Outlook For U.S. Not-For-Profit Acute Health Care: Navigating The Bumps While Getting Back On Track," published Jan. 12, 2021, on RatingsDirect) and that we have reflected in our outlook.

For a list of new ratings assigned last year see table 2. For lists of upgrades, downgrades, and unfavorable and favorable outlook revisions without a rating change taken during 2020 please see tables 3, 4, 5, and 6.

Table 2

U.S. Not-For-Profit Health Care Ratings Initially Assigned, 2020
Obligor State Rating Outlook Type
Baptist Health Care FL BBB+ Stable Hospital
Provident Group - UIC Surgery Center LLC IL BBB+ Stable Hospital
Shodair Children's Hospital MT BBB- Stable Hospital
United Health Services Hospitals, Inc. NY BBB Stable Hospital
Virginia Hospital Center VA A+ Stable Hospital

Table 3

U.S. Not-For-Profit Health Care Ratings Raised, 2020
Obligor State Rating to Rating from Outlook Type
Circleport Conference Center Landlord LLC KY AA- A+ Stable Health system
Cottage Health CA AA- A+ Stable Hospital
Great Plains Health NE A A- Stable Hospital
Nanticoke Memorial Hospital DE A BBB Stable Hospital
NYU Langone Hospitals NY A A- Stable Health system
St Leonard Healthcare Center OH BBB BBB- Stable LTC & HSP*
Swedish Covenant Health IL AA- BBB Stable Hospital
T.J. Samson Community Hospital KY BBB BBB- Stable Hospital
Wake Forest Baptist Medical Center NC AA- A Stable Health system
*Long-term care and human service provider.

Table 4

U.S. Not-For-Profit Health Care Ratings Lowered, 2020
Obligor State Rating to Rating from Outlook Type
Army Retirement Residence Foundation TX BBB- BBB Negative LTC & HSP*
Beverly Community Hospital Association CA BB BBB- Negative Hospital
Cape Cod Healthcare MA A A+ Stable Hospital
Care New England Health System RI B+ BB- Negative Hospital
Catholic Health System NY BBB BBB+ Negative Health system
Catholic Medical Center NH BBB+ A- Developing Hospital
Centra Health VA A- A Stable Health system
Ector County Hospital District TX BBB- BBB Negative Hospital
Elwyn, Inc. PA BBB- BBB Not meaningful LTC & HSP*
Elwyn, Inc. PA BB BBB- Negative LTC & HSP*
Flagler Hospital FL BBB BBB+ Stable Hospital
Geisinger Health PA AA- AA Stable Health system
Good Shepherd Group PA A- A Negative Hospital
Grand View Hospital PA BBB+ A- Negative Hospital
Hospital Sisters Services, Inc. IL A+ AA- Stable Health system
INTEGRIS Health OK A A+ Stable Health system
Kuakini Health System HI B- B Negative Hospital
Lawrence General Hospital MA B BB Negative Hospital
Marin General Hospital CA BBB+ A- Negative Hospital
Marion General Hospital IN A A+ Stable Hospital
Mercy Health MO A+ AA- Stable Health system
Monongalia Health System WV BBB BBB+ Stable Hospital
New Liberty Hospital District MO B+ BBB Stable Hospital
Nicholas H. Noyes Memorial Hospital NY BB- BB Negative Hospital
Northern Inyo County Local Hospital District CA B+ BB- Negative Hospital
Opelousas General Hospital Authority LA BB BB+ Negative Hospital
Oroville Hospital CA BB BB+ Negative Hospital
Rochester General Hospital NY BBB+ A- Stable Health system
San Antonio Regional Hospital CA BBB BBB+ Stable Hospital
Southeast Georgia Health System GA BBB+ A- Stable Hospital
Sparrow Health System MI A A+ Negative Health system
Sutter Health CA A+ AA- Stable Health system
Tower Health PA BB+ BBB+ Negative Health system
University of Pittsburgh Medical Center PA A A+ Stable Health system
Virginia Mason Medical Center WA BBB- BBB Stable Hospital
White River Health System, Inc. AR BBB- BBB Stable Hospital
*Long-term care and human service provider.

Table 5

U.S. Not-For-Profit Health Care Favorable Outlook Revisions, 2020
Obligor State Rating Outlook to Outlook from Type
AnMed Health System and Affiliates SC A+ Stable Negative Hospital
Bowling Green-Warren County Community Hospital Corporation KY A+ Positive Stable Hospital
Casa Colina Centers for Rehabilitation CA BBB+ Positive Stable Hospital
Children's Hospital Colorado CO A+ Positive Stable Hospital
El Paso County Hospital District TX BBB+ Stable Negative Hospital
Fort Healthcare, Inc. WI BBB+ Positive Stable Hospital
Franciscan Sisters of Christian Charity Sponsored Ministries, Inc. WI BBB- Stable Negative Hospital
Glencoe Regional Health Serivces MN BBB Stable Negative Hospital
Guadalupe Regional Medical Center TX BB Stable Negative Hospital
Hunt Memorial Hospital District TX BBB+ Stable Negative Hospital
Huntington Memorial Hospital CA A- Positive Negative Hospital
Indiana University Health IN AA Positive Stable Health system
Jennie Stuart Medical Center KY BB+ Stable Negative Hospital
Lehigh Valley Health Network PA A+ Stable Negative Health system
Lifespan RI BBB+ Stable Negative Health system
Milford Regional Medical Center MA BB+ Stable Negative Hospital
North Oaks Health System LA BB+ Positive Negative Hospital
Northwest Community Hospital IL A Positive Stable Hospital
Oak Valley Hospital District CA BB Stable Negative Hospital
OU Medicine, Inc. OK BB+ Stable Negative Hospital
PIH Health CA A Stable Negative Hospital
Reid Health IN A- Stable Negative Hospital
Samaritan Health Services OR BBB+ Stable Negative Health system
Southeastern Regional Medical Center NC BBB+ Stable Negative Hospital
St. Charles Parish Hospital District #1 LA B Positive Stable Hospital
Temple University Health System PA BBB- Stable Negative Hospital
Vernon Memorial Hospital WI BB Stable Negative Hospital
White River Health System, Inc. AR BBB- Stable Negative Hospital

Table 6

U.S. Not-For-Profit Health Care Unfavorable Outlook Revisions, 2020
Obligor State Rating Outlook to Outlook from Type
Anne Arundel Health System MD A Negative Stable Hospital
Atrius Health MA BBB Negative Stable Physician group practice
Bibb County Healthcare Authority AL BB Negative Stable Hospital
Boston Medical Center MA BBB Stable Positive Hospital
Boulder Community Health CO A- Negative Stable Hospital
Brooks Health System FL A Negative Stable Hospital
Cabell Huntington Hospital WV BBB+ Stable Positive Hospital
Dawson County Hospital District TX CCC Negative Stable Hospital
Delta County Memorial Hospital District CO BB Negative Stable Hospital
Ector County Hospital District TX BBB Negative Stable Hospital
Edward-Elmhurst Healthcare IL A Negative Stable Hospital
Fairview Health Services MN A+ Negative Stable Health system
Fisher-Titus Medical Center OH A- Negative Stable Hospital
Geisinger Health PA AA Negative Stable Health system
Genesis Healthcare System OH BB+ Negative Stable Hospital
Grand River Hospital District CO BB+ Negative Stable Hospital
Griffin Health Services CT BB+ Negative Stable Hospital
Guadalupe Regional Medical Center TX BB Negative Stable Hospital
Guthrie Clinic PA A+ Negative Stable Health system
H. Lee Moffitt Cancer Center & Research Institute FL A- Stable Positive Hospital
Hamilton Health Care System GA AA- Negative Stable Hospital
Hardin Memorial Hospital KY A- Negative Stable Hospital
Hendrick Health System TX A Stable Positive Hospital
Holy Name Medical Center NJ BBB Negative Stable Hospital
INTEGRIS Health OK A+ Negative Stable Health system
Jackson Hospital and Clinic AL BBB- Negative Stable Hospital
Jefferson County Public Hospital District No. 2 WA BB+ Negative Stable Hospital
Jennie Stuart Medical Center KY BB+ Negative Stable Hospital
Lifespan RI BBB+ Negative Stable Health system
Loma Linda University Medical Center CA BB- Negative Stable Health system
Louisiana Children's Medical Center LA A+ Negative Stable Health system
Madison Memorial Hospital ID BB+ Negative Stable Hospital
MaineHealth ME A+ Stable Positive Health system
Marshfield Clinic WI A- Negative Stable Health system
Methodist Le Bonheur Healthcare and Affiliates TN AA- Negative Stable Health system
Milford Regional Medical Center MA BB+ Negative Stable Hospital
Mohawk Valley Health System NY BB+ Negative Stable Health system
Morris Hospital IL BBB+ Negative Stable Hospital
National Jewish Health CO BB+ Negative Stable Hospital
Nebraska Medicine NE AA- Negative Stable Hospital
Nicholas H. Noyes Memorial Hospital NY BB Negative Stable Hospital
North Oaks Health System LA BB+ Negative Stable Hospital
Oak Valley Hospital District CA BB Negative Stable Hospital
Opelousas General Hospital Authority LA BB+ Negative Stable Hospital
Orange Regional Medical Center NY BBB- Stable Positive Hospital
Oroville Hospital CA BB+ Negative Stable Hospital
OU Medicine OK BB+ Negative Stable Hospital
Palomar Health CA BBB Negative Stable Hospital
PIH Health CA A Negative Stable Hospital
Pomona Valley Hospital Medical Center CA BBB Negative Stable Hospital
Prisma Health SC A Negative Stable Health system
Rochester General Hospital NY A- Negative Stable Health system
Rush University System for Health IL A+ Stable Positive Health system
Ryder Memorial Hospital PR CCC Negative Stable Hospital
Samaritan Medical Center NY BBB- Negative Stable Hospital
Southeastern Regional Medical Center NC BBB+ Negative Stable Hospital
SoutheastHEALTH MO BBB- Negative Stable Hospital
Southern Illinois Healthcare Enterprises IL A+ Negative Stable Hospital
Southwest Louisiana Hospital Association LA BB+ Negative Stable Hospital
St. Charles Parish Hospital District #1 LA B Stable Positive Hospital
St. Peters University Hospital NJ BB+ Stable Positive Hospital
Temple University Health System PA BBB- Negative Stable Hospital
UC Health OH A Negative Stable Hospital
University of Chicago Medical Center IL AA- Negative Stable Hospital
Vermont Council of Development & Mental Health Service Acquisition VT B Stable Positive LTC & HSP*
Vidant Health NC A+ Negative Stable Health system
Virginia Commonwealth University Health System Authority VA AA- Negative Stable Hospital
Virtua Health NJ AA- Negative Stable Health system
Wellforce MA BBB+ Negative Stable Health system
Westchester County Health Care Corporation NY BBB- Negative Stable Health system
White River Health System AR BBB- Negative Stable Hospital
Whitman County Public Hospital District #1-A (Pullman Regional Hospital) WA BBB- Negative Stable Hospital
Winkler County Hospital District TX BB+ Negative Stable Hospital
Yuma Regional Medical Center AZ A Stable Positive Hospital
*Long-term care and human service provider.

Related Research

This report does not constitute a rating action.

Primary Credit Analyst:Cynthia S Keller, New York + 1 (212) 438 2035;
cynthia.keller@spglobal.com
Secondary Contacts:Alexander Nolan, Centennial + (1) 303.721.4501;
alexander.nolan@spglobal.com
Suzie R Desai, Chicago + 1 (312) 233 7046;
suzie.desai@spglobal.com

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