S&P Downgrades Mission, Texas, Hospital District to CCC

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DALLAS – More than $26 million of bonds used to finance the Mission Regional Medical Center in Mission, Texas, fell to CCC on S&P Global Ratings' scale after the struggling hospital announced a partnership with a competing medical system.

The debt issued by the Hidalgo County Health Services Corp. previously carried S&P's B-minus rating after a five-notch downgrade in May. The hospital lost its investment-grade rating of BBB-minus on Dec. 15, when S&P cut it to BB-plus.

Mission RHC's third-quarter financial results through June 30 show further losses, analysts said, leading to a continued negative outlook.

Over the last six months of 2015, MRMC's liquidity fell to $8 million or 26 days cash from $19 million or 63 days on June 30, according to Moody's Investors Service, which downgraded the bonds to Caa1 from Ba2 in February.

Analysts from Moody's and S&P cited the hospital's reliance on supplemental sources of funding, including Medicaid disproportionate share and uncompensated care programs.

The hospital's management consultants Financial Resources Group notified investors that the hospital will not be able to find enough savings to offset the loss of its supplemental payments.

In August, Doctors Hospital at Renaissance Health System announced an agreement to help Mission Regional Hospital expand as a short-term or secondary healthcare facility. DHR, based in nearby Edinburg, is a physician-owned system. The deal is expected to close by the end of the year, according to DHR.

"The goal is for the entities to enter into a final transaction that would solidify the presence of a community-owned, acute care facility in Mission, Texas, for years to come," according to a DHR press release.

A letter of intent calls for a new community led nonprofit board to oversee the operations of the MRMC under the hospital's current hospital license with a plan to expand services.

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Healthcare industry Texas
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