The financial outlook for U.S. not-for-profit hospitals has declined with disruptions in the credit and liquidity markets and the downturn in the economy, according to a report issued yesterday by Moody’s Investors Service. “Even some of the larger hospital systems that have the economies of scale to absorb most challenges are reporting a downturn in financial performance brought about by the weakening economy with increasing charity care and bad debt levels,” the report states. “Volumes are softening, particularly in surgical cases, also contributing to financial performance declines. Likewise, the ongoing credit crisis has limited access to the debt market in recent weeks and the tax-exempt market is a primary source of capital funding for many not-for-profit providers. Looking forward, the cost of borrowing will likely be higher − and may be non-existent for lower-rated hospitals − as the supply of health care paper overwhelms buyers. As a result of all of these factors, we have changed the not-for-profit health care industry outlook to negative from stable.”