Hospital Mergers May Boost Debt Ratings as Providers Lower Costs

A wave of hospital mergers, driven partly by the slow economic recovery, reduces financial risks for many institutions and may boost credit ratings in the $3.7 trillion municipal bond market, Moody’s Investors Service said.

Reimbursement pressures and rising costs coupled with the prospect of “healthcare reform and an unsustainable payment system” have driven not-for-profit hospitals to look for partnerships, Moody’s said in a report released today. They are choosing to consolidate with other health-care systems to boost their market presence and strengthen balance sheets, analysts led by Lisa Goldstein said in the report.