"It's too short of a time to call it a trend," Goldstein says of the second-quarter results. "There is a lot of volatility of the sector. We caution that it is just three months and three months today may look very different from the prior quarter."
In fact, the Q2 results were skewed mainly because several larger not-for-profit providers had their ratings downgraded, including Kettering Health Network in Kettering, OH, and Fairview Health Services in Minneapolis, MN, according to the Moody's report, US Not-For-Profit Healthcare Quarterly Ratings: Downgraded Debt Trumps Upgraded Debt in Second Quarter 2012, Reversing Prior Trends.
Overall, there were 12 downgrades in the second quarter and nine upgrades for a ratio of 1.33 to 1, which Moody's reports is consistent with the negative conditions faced by the not-for-profit healthcare sector.
For the first half of 2012 there have been 23 downgrades affecting $4.2 billion in debt and 20 upgrades affecting $4.8 billion.
Of the downgraded providers in the second quarter of 2012, 56% had total operating revenue of $500 million or less while 56% of upgraded providers with operating revenues of $500 million or less. "This near equal split is a departure from the typical trend of smaller providers being more susceptible to downward ratings pressure due to multiple negative factors that put them at a disadvantage relative to their larger peers," Moody's said.