Rating Agency Spring Update on the Pandemic, Labor and ESG

60 minute
Consumerism mural of hospital

Listen to rating agency experts discuss the pandemic’s continued financial impact on hospitals including labor challenges and volume trends. They also discuss the rating agencies’ perspectives on Environmental, Social and Governance (ESG) strategies and the impact on credit.


  • Suzie Desai, Senior Director, S&P Global Ratings
  • Eva Bogaty, Associate Managing Director, Moody’s Investors Service
  • Kevin Holloran, Senior Director, Fitch Ratings
  • Moderators: Robert Turner and Lisa Goldstein, Kaufman Hall

Conversation Highlights


  • It is still with us and needs to be included in rating meetings
  • The industry may be better prepared to face future disruptions


  • Cyber is of growing importance and should be included in rating meetings
  • Areas to discuss are investments in cyber security, processes in the event of a breach, and decisions around cyber insurance and governance over patient data


  • It is important and a growing part of credit analysis
  • These issues have already been incorporated in ratings, however, so ESG is unlikely to have a significant impact on rating decisions

Financial Planning and Forecasts

  • Forecasts are returning to 2- to 3-year time horizons; even a range of metrics is helpful as uncertainty remains regarding future surges
  • Discussing the assumptions driving the forecast remains an important conversation with the rating agencies

Rating Activity

  • Upgrades exceeded downgrades in 2021, indicating that an improving and durable ability to pay one’s debt can endure, even during a pandemic
  • Even if financial performance does not return to pre-pandemic levels, the rating agencies do not anticipate a portfolio-wide downgrade of every bond rating; medians don’t drive ratings

Rating Fundamentals

  • The tried and true metrics of credit analysis remain central to the rating
  • Balance sheet strength and liquidity are fundamental and provide some rating resiliency, given income statement pressures

Workforce issues

  • Healthcare is experiencing what probably will be a permanent reset of labor costs at a higher level
  • Nursing shortages may be alleviated somewhat in markets with strong unions if nurses are reluctant to give up the benefits of seniority by leaving their health system position
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