Moody’s Investors Service downgraded Lakewood Hospital Association to A2 and assigned a negative outlook due to admission declines and operating losses.

The action affects $20 million of bonds sold in 2003 through the city of Lakewood, located outside Cleveland. “The negative outlook is driven by challenges to reversing volume losses and improving operating performance, and increasing capital plans and pension funding requirements,” analysts wrote.

Lakewood’s challenges include tough competition in its service area that has led to increased physician turnover and admission declines. The hospital also has planned $40 million of capital projects over the next five years to upgrade facilities and address deferred maintenance.

The hospital benefits from its participation in the Cleveland Clinic Health System, which carries an Aa2 rating. The city owns the hospital but CCHS operates it under a lease. 

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