Moody’s Investors Service last week placed Crittenton Hospital Medical Center’s Baa1 rating on review for downgrade, warning that the Michigan hospital’s debt service coverage ratio has declined below the required covenant provisions.

The move affects $39.7 million of debt rated by Moody’s.

Crittenton is a 290-bed hospital that serves Oakland, Macomb and Lapeer counties in the southeast part of the state.

The hospital recently released its fiscal 2011 audit, which showed that its debt-service coverage ratio declined to 1.19 times, below the required 1.2 times in its master trust indenture, Moody’s said in the report.

The placement on review also reflects a large operating loss in 2011, a decline in unrestricted cash and investments, and a proposed new debt issuance, according to analysts.

The hospital’s chief financial officer recently left, adding more uncertainty to the rating, the report said.

The cash and investment decline comes from a transfer of funds to help pay for a new patient tower.

The debt-service coverage covenant decline is not expected to be considered a default event because the hospital has hired consultants, according to Moody’s.

The rating action could change over the next 30 days after a meeting with hospital officials.

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