Memorial keeps credit rating, receives negative outlook

Memorial Health System kept its A- rating from Standard & Poor’s, but received a negative outlook.

The hospital gave the news at yesterday’s city council meeting, and also asked its lender to give a prognosis of its financial standing.

“Part of the downgrade is certainly because of the governance issue,” said Steve Self, president of Compass Bank, who holds much of Memorial’s debt. “But some of it stems from the overall uncertainity in the industry as a whole. There’s uncertainty over payments and reimbursements, for instance. But some sectors – acute care hospitals, senior housing – are doing very, very well.”

Overall, Memorial is also doing well, Self said. He said Compass Bank was pleased with its relationship with Memorial and believed the hospital system still had the ability to pay its debts.

Memorial will probably end the year with an $8.7 million loss, due largely to lower-than-expected patient volumes. But it has 189 days of cash on hand, and overall, it’s balance sheet is positive.

“Memorial is one of our strongest medical clients – and we have a large portion of the medical clients across the United States,” Self said.

Self said the hospital’s success could be attributed to the “leadership and management style of the administration.”

“There is some pressure on the debt service because of the patient volume,” he said. “But we are working with Memorial to introduce some efficiencies – and we’ve done so. From the standpoint of Memorial as an asset, it’s still very positive.”

Memorial is still waiting on its credit rating from Moody’s, but in its presentation to council, said the rating agency had given the hospital industry an overall negative outlook.

The good news, according to the presentation, is that the hospital tracked closer to its budgeted patient volumes for January. Howeve,r December showed that admissions were down by 9.9 percent over budget and 8.3 percent for the year. The emergency department showed an increase of 2.5 percent for the year, but outpatient visits were down .2 percent for the year, and more than 20 percent from Memorial’s budget.

Net patient revenue for December was $539 million, and that was an increase of .5 percent from the $536 million earned in December 2010. Net income however, was down $7.7 million for the month, a loss of 137 percent from budget and was $32 million for the year, a loss of 124 percent from 2010.

Other Memorial news: Two Memorial physicians performed the first hybrid ablation procedure in Colorado. The procedure was a collaboration between a heart surgeon and a cardiologist to find the reason for a patient’s irregular heartbeat and repair it – instead of placing a pacemaker inside the chest cavity.

Memorial’s compliance with core measures hit a record high 94 percent in December, as well, the hospital reported to city council. Core measures are national standards of patient care and include metrics for heart attack, heart failure, pneumonia, surgical care and perinatal care.