Moody's Investors Service has downgraded Hospital Sisters Services Inc.'s rating by one notch to A1 due to sizeable operating losses at the Springfield, Ill.-based system.
The action affects $543.4 million of outstanding debt. The outlook is stable. The HSSI issues debt through the Illinois Finance Authority and the Wisconsin Health and Educational Facilities Authority.
The losses that drove the downgrade are principally due to the integration of large physician groups into the system, as well as pressure on the Hospital Sisters’ acute-care facilities as inpatient volume declines have led to market share losses since 2006.
HSSI's management estimates that financial performance over the next two to three fiscal years will remain below historical levels.
"The ratings and stable rating outlook remain supported by HSSI's large clinical footprint across two states with multiple complementary market positions, strong and liquid investment position and healthy coverage of modest leverage," according to the credit report from Moody's.
The system operates eight hospitals in Illinois and five in Wisconsin that helped generate $2 billion in revenue in fiscal 2011.
The system benefits from cash reserves of more than $1.4 billion, providing 273 days cash on hand.
