Becker's Hospital Review

12 CFO / FINANCE 6 hospitals hit with credit downgrades By Ayla Ellison C redit rating downgrades for several hospitals and health systems were tied to capital expenditures and cash flow issues in recent months. e following six hospital and health system credit rating downgrades occurred since May: Doylestown (Pa.) Hospital — lowered in June from "Ba1" to "Ba3" (Moody's Investors Service). "e downgrade to Ba3 reflects Doylestown Hospital's … significant and recent decline in operating performance and unrestricted cash reserves through fiscal 2022, which have materially reduced headroom to the days cash on hand covenant (100 days) and increases the risk of an event of default and immediate acceleration as soon as June 30, 2022, a governance consideration under our ESG framework," Moody's said. Jupiter (Fla.) Medical Center — lowered in June from "BBB+" to "BBB" (Fitch Ratings). "e 'BBB' rating reflects JMC's increased leverage profile with the issuance of $150 million in additional debt to fund various campus expansion and improvement projects," Fitch said. "While favorable population growth in the service area and demonstrated demand for services in an increasingly competitive market justify the overall strategic plan and project, the additional debt weakens JMC's financial profile metrics and increases the overall risk profile." Memorial Health System (Marietta, Ohio) — lowered in July from "BB-" to "B+" (Fitch Ratings). "e downgrade of the IDR to 'B+' reflects MHS's weak net leverage profile through Fitch's forward- looking scenario analysis given stated growth and spending objectives," Fitch said. "While operating performance has stabilized over the past three years … and reflects cost efficiency strategies and pandemic relief funding, improved cash flow funded higher levels of capital spending in fiscals 2020 and 2021." ProMedica (Toledo, Ohio) — lowered in May from "BBB-" to "BB+" (Fitch Ratings). "e long-term 'BB+' rating and the assigned outlook to negative on ProMedica Health System's debt reflects the system's significant financial challenges as result of continued pressure of the coronavirus pandemic and escalating expenses, with ProMedica reporting a $252 million operating loss that follows several years of weak performance," Fitch said. San Gorgonio Memorial Healthcare District (Banning, Calif.) — lowered in May from "Ba1" to "Ba2" (Moody's Investors Service). "e downgrade to Ba2 reflects the district's tenuous cash position and weak finances that have contributed to difficulty in securing a bridge loan financing for liquidity needs pending the delayed receipt of approximately $8 million to $9 million in intergovernmental transfers beyond the end of the fiscal year," Moody's said. South Shore Hospital (South Weymouth, Mass.) — lowered in June from "BBB+" to "BBB" (Fitch Ratings). "e downgrade to 'BBB' reflects SSH's track record of very weak operating performance over the last four fiscal years, exacerbated by staffing shortages and other pandemic-related challenges, which are stymying the system's efforts towards an operational turnaround," Fitch said. n Pennsylvania health system to lay off 245 employees By Ayla Ellison Commonwealth Health, part of Franklin, Tenn.-based Community Health Systems, will lay off 245 employees when it closes facilities at the end of October. The health system is closing First Hospital, a psychiatric hospital in Kingston, Pa., and its various outpatient centers on Oct. 30. The hospital stopped accepting new admissions at the beginning of August. Commonwealth Health said it had become increasingly difficult to maintain staffing at First Hospital over the past couple of years, and an incident at the hospital in June resulted in a significant decline in admissions. "As admissions declined, more staff members chose to leave," the health system said in an Aug. 1 news release. When the hospital and its outpatient centers close, 245 employees will lose their jobs, according to a notice filed with state regulators. "Current employees are being encouraged to apply for any open positions for which they are qualified across Commonwealth Health," a health system spokesperson told Becker's Hospital Review. "We hope that many of these valued team members will remain with our health system." n Credit rating downgrades for several hospitals and health systems were tied to capital expenditures and cash flow issues.

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