CHA News Article

Moody’s Changes Credit Rating Methodology for Nonprofit Hospitals, Systems

Moody’s Investors Service has updated its credit rating methodology when assigning ratings to nonprofit hospitals and health systems. The new scorecard incorporates both a quantitative grid and qualitative factors. Moody’s will include five main factors on its scorecard: market position, operating performance, balance sheet and capital plan, governance and management, and debt structure and legal covenants.

The new scorecard will provide more transparency and clarity on how Moody’s assesses credit quality. According to Moody’s, the new methodology will provide more measurable and descriptive characteristics for each of the five key factors on its weighted quantitative grid. The new scorecard replaces the 2008 matrix. Moody’s indicated that the new methodology is not expected to result in any ratings changes. For more information, see attached March 5 report.