published Tuesday, September 27th, 2011

Moody's Investor Services revises Erlanger's outlook from stable to negative

Moody's Investor Services reaffirmed its A3 rating for Erlanger Health System, but the rating agency on Monday revised its outlook for the hospital from stable to negative.

Moody's analysts said Erlanger remains a regional draw in a growing area and as a safety-net hospital qualifies for disproportionate payments from Medicaid.

But Moody's also said the decline in cash flow for Chattanooga's biggest hospital in the past two years -- combined with the prospect of future cuts in state and federal payments -- led to a negative outlook for Erlanger. Hospital CEO Jim Brexler said the A3 rating -- the third highest rating in Moody's nine-level grading system -- "is great news and an affirmation of our team's tremendous efforts in a very tough economy."

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