Becker's Spine Review

48 HEALTHCARE NEWS 13 Health Systems With Strong Finances By Ayla Ellison H ere are 13 health systems with strong operational metrics and solid finan- cial positions, according to recent reports from Moody's Investors Service and S&P Global Ratings. Note: is is not an exhaustive list. Health sys- tem names were compiled from recent credit rat- ing reports and are listed in alphabetical order. 1. Downers Grove, Ill.-based Advocate Health Care has an "Aa2" rating and stable outlook with Moody's. e health system has a strong market position, healthy liquidity, moderate leverage and good debt metrics, ac- cording to Moody's. 2. Morristown, N.J.-based Atlantic Health Sys- tem has an "Aa3" rating and stable outlook with Moody's and an "AA-" rating and stable outlook with S&P. e system has stable operating per- formance, balance sheet growth and a favorable market position, according to Moody's. 3. Dallas-based Baylor Scott & White Health has an "Aa3" rating and stable outlook with Moody's. e health system has strong cash flow margins and a favorable business position as the largest nonprofit health sys- tem in Texas, according to Moody's. 4. Milwaukee-based Children's Hospital and Health System has an "Aa3" rating and stable outlook with Moody's. e system has a strong balance sheet and is the dominant provider of tertiary and quaternary pediatric services in southeastern Wisconsin, according to Moody's. 5. Indianapolis-based Indiana University Health has an "Aa2" rating and stable outlook with Moody's. e system has healthy mar- gins and a strong market position, according to Moody's. 6. Rochester, Minn.-based Mayo Clinic has an "Aa2" rating and stable outlook with Moody's. Mayo has an excellent clinical rep- utation and diversified revenue across mul- tiple locations, states and types of hospitals, according to Moody's. 7. Mercy Health in St. Louis, has an "Aa3" rating and stable outlook with Moody's and an "AA-" rating and stable outlook with S&P. e health system has solid debt service cov- erage and strong balance sheet metrics, ac- cording to Moody's. 8. Chicago-based Northwestern Memori- al HealthCare has an "Aa2" rating and sta- ble outlook with Moody's. e system has a prominent and growing market position in the Chicago region, a strong investment posi- tion, good margins and manageable leverage, according to Moody's. 9. San Diego-based Sharp HealthCare has an "Aa3" rating and stable outlook with Moody's. e system has strong balance sheet measures and a fundamentally stable and strong strate- gic position, according to Moody's. 10. Stanford (Calif.) Health Care has an "Aa3" rating and stable outlook with Moody's. e system has a strong market position as one of two major academic medical centers in the Bay Area, has a reputation for clinical excellence and research, and is in a service area with strong population growth and high wealth levels, according to Moody's. 11. Iowa City-based University of Iowa Hos- pitals & Clinics has an "Aa2" rating and sta- ble outlook with Moody's. e health system has a broad market with growing patient vol- umes and geographic reach for its high-acuity services. Moody's expects the health system's expense control initiatives to continue to gain traction through fiscal year 2018. 12. Philadelphia-based University of Penn- sylvania Health System has an "Aa3" rating and stable outlook with Moody's. e health system has a strong market position, solid operating margins and limited debt burden, according to Moody's. 13. Yale New Haven (Conn.) Health Sys- tem has an "Aa3" rating and stable outlook with Moody's. e system has a leading mar- ket position in Connecticut, solid liquidi- ty, moderate capital needs and manageable leverage, according to Moody's. n At Least 26 Nonprofit Hospitals at Risk Of Bankruptcy: 5 Things to Know By Ayla Ellison M any nonprofit hospitals across the nation are facing financial challenges, and they may soon face higher borrowing costs. Here are five things to know about the financial pressure nonprofit hospitals are facing. 1. Nonprofit hospitals and health systems issue tax-exempt bonds to finance capital projects. Under the House Republicans' tax plan, interest on newly is- sued private-activity bonds would no longer be tax-exempt. 2. This change would reduce financing options for some healthcare organiza- tions by raising the cost of capital, according to S&P Global Ratings. "From a credit perspective, higher borrowing rates can lead to budget imbalances, a challenge for all, and a hallmark of struggling credits," said S&P. 3. The move to eliminate tax exemptions for new private-activity bonds is not included in a bill passed by Senate Republicans Dec. 2, 2017. 4. The threat of higher borrowing costs comes as nonprofit hospitals' finances are already under pressure. According to data compiled by Bloomberg, at least 26 nonprofit hospitals across the nation are already in default or distress. These facilities have notified bondholders of financial challenges, such as having too little cash on hand, that make bankruptcy more likely, according to the report. 5. Many of the nonprofit hospitals under the most financial pressure are in rural areas with "older, poorer and sicker" patient populations, Margaret Elehwany, vice president of government affairs and policy at the National Rural Health Association, told Bloomberg. She said approximately 44 percent of rural hos- pitals operate at a loss. n

• Cover