Becker's Hospital Review

14 CFO / FINANCE 6 hospitals hit with credit downgrades By Ayla Ellison C redit rating downgrades for several hospitals and health sys- tems were tied to capital expenditures and cash flow issues in recent months. e following six hospital and health system credit rating downgrades occurred since June: • Boone Hospital Center (Columbia, Mo.) — lowered in August from "Ba1" to "Ba3" (Moody's Investors Service) "e downgrade to 'Ba3' reflects the continued and material deterioration of unrestricted cash, along with simultaneous operational challenges facing BHC," Moody's said. "Operating headwinds, along with recent turnover in senior management, will contribute to challenges in attaining performance improvements. ese headwinds will include elevated labor and supply costs, partly raised by supply chain system implementation issues, and volume disruption, which has been exacerbated by the on-going pandemic, as well as the absence of state or federal funds in 2022." • Jackson Hospital (Montgomery, Ala.) — lowered in August from "Baa3" to "Ba3" (Moody's Investors Service) "e downgrade to 'Ba3' reflects Jackson Hospital & Clinic's material and recent deterioration of operating performance and unrestricted cash through June 2022," Moody's said. "As a result, headroom to both the debt service coverage and days cash on hand covenants has been materially reduced increasing the risk of a covenant violation, which could lead to immediate acceleration of debt, a governance consideration under our ESG framework." • 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." • 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." • 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 Study: No Surprises Act could result in millions more emergency department visits By Rylee Wilson T he No Surprises Act, which prevents patients from receiving surprise bills from out-of-network providers at emergency rooms, could lead to an increase in emergency department visits, a new study from the Agency for Healthcare Research and Quality found. The study, published Sept. 12 in The American Journal of Medical Care, compared emergency department visits rates in 15 states that implemented bans on balance billing between 2007 and 2018 to rates in 16 states where these bills were not banned. The study's authors found that state-level bans reduced spending per emergency room visit by 14 percent but increased emergency room visits by 3 percentage points. These visits were 9 percent less urgent than before the balance billing ban, according to an emergency department severity index. Based on the state-level analysis, the study's authors, led by AHRQ researcher William Encinosa, PhD, conclude that the No Surprises Act, which took effect this year, could result in 3.5 million more emergency room visits annually. "Because individuals will no longer have the fear of a possible catastrophic surprise ED bill not covered by their insurer, they may be more inclined to go to the ED in marginal, less severe cases," the authors wrote. n

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