S&P Lowers Reading, Pa., Health System

Standard & Poor's lowered its long-term rating to AA-minus from AA on Berks County Municipal Authority, Pa.'s revenue refunding bonds, issued for Reading Health System of West Reading, Pa., formerly Reading Hospital & Medical Center.

The outlook is stable.

"The lower rating reflects operating performance and debt service coverage that are weak compared with median levels and some expected balance sheet weakening with an upcoming construction project," S&P credit analyst Jessica Goldman said Aug. 21. "The unaudited fiscal 2014 results indicate a continued decline in operating performance and coverage."

The weaker performance is in part due to some operating expenses, which management notes are non-recurring in nature - so although S&P expects some operating performance improvement in the next year, it does not believe it will be to a level parallel to the prior rating.

S&P hinged its stable outlook on its expectation that Reading's operational improvement efforts and service area population growth will help improve operating profitability.

Wendie Waschitsch, Reading Health's communications director, said the system expected S&P's action, largely in response to its investment in a new surgical center. "Reading Health System, as S&P affirms, remains financially and operationally strong," she said in a statement. "Importantly, the S&P rating confirms our stable outlook on achieving future performance objectives and also affirms the long term financial strength and position of Reading Health System."

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Healthcare industry Pennsylvania
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