The pandemic brought a wave financial issues to hospitals last year, as droves of patients came in and forced cuts to elective surgeries and other big revenue generators.

How are hospitals backed by tax-exempt bonds doing now? From Marketwatch:

While hospital bonds are trading at levels that show slightly more stress than pre-pandemic February, they’re no more distressed than any other municipal revenue bonds, Bloomberg data show. And hospitals may have options, like merging or consolidating with others, that other municipal entities may not be able to tap, Kazatsky pointed out.


Postponed elective services will reduce not-for-profit hospital revenue by about 25%-40% per month, according to a recent research analysis by Moody’s Investors Service, which has a negative outlook on the sector. Moody’s calls the CARES Act, the federal stimulus legislation passed in late March, a modest positive.

The CARES Act sets aside $100 billion for hospitals to cover lost revenue, prepare for coronavirus treatment, and provide an advance on some expected Medicare reimbursements. But Moody’s cites data from the Centers for Medicare and Medicaid Services that estimates national hospital services spending at $100 billion every month, and notes that the pandemic is almost certain to last longer than that.

Moody’s and Kazatsky both believe that large, well-diversified hospital systems, which may often have a dominant position in a regional area, will withstand the downturn better than smaller, single-site providers — even if right now the bigger players in more urban areas are taking the most heat.

Big players like Bon Secours Mercy Health, a seven-state system with $10 billion in annual revenue on the East Coast and Mid-Atlantic, have operating margins of about 10%, Kazatsky said. In fact, Moody’s just upgraded Bon Secours, saying “The system’s ample liquidity of over $5 billion and likely benefits of additional funding via the CARES Act should allow it to manage the impact of COVID-19, along with other factors.”