Lakewood Hospital Drops

Moody’s Investors Service Monday downgraded the Lakewood Hospital Association to A3 from A2, warning that it faces significant financial challenges going forward. Analysts kept the outlook negative at the lower rating.

The downgrade affects $16 million of bonds that were issued in 2003 through the city of Lakewood, northwest of Cleveland.

The hospital would likely be rated lower than A3 but is supported by its relationship with the prestigious Cleveland ­Clinic Health System. The Cleveland Clinic manages and leases the hospital, while its real assets are owned by ­Lakewood.

The hospital also benefits from its low debt and sufficient liquidity, according to Moody’s.

Lakewood’s chief challenges include its location in an intensely competitive health-care service area, declining admissions, and a second year of “very large” operating losses, Moody’s said.

“Although the hospital has begun to restructure its operations, including closing certain services, progress is slower than anticipated and the magnitude of expected improvement is modest relative to the size of the operating losses,” analyst Lisa Martin said in a report on the downgrade.

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Healthcare industry
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