Ball Memorial Hospital, Ind., Raised to Baa2 by Moody’s

NEW YORK - Moody's Investors Service said it has upgraded the bond rating on Ball Memorial Hospital's (dba Indiana University Health Ball Memorial Hospital) outstanding bonds issued by the Delaware County Hospital Authority, Ind., to Baa2 from Baa3. The outlook at the Baa2 level is positive. The rating action affects $101 million of rated debt.

The Baa2 rating and rating upgrade is based on BMH's dominant market position as the only hospital in Delaware County, good operating margins which improved significantly in the last two years, solid debt measures and all fixed rate debt structure, and substantial benefits from the hospital's highly integrated relationship with Indiana University Health (the sole corporate member of BMH).

The hospital's challenges include economic challenges resulting in a high Medicaid and self-pay level, modest unrestricted investment position relative to operations and debt, exposure to variability in investment returns due to a more aggressive asset allocation than is typical for the rating category, and indirect debt obligations through operating leases and an underfunded pension plan (although frozen) that contribute to a higher comprehensive debt position.

The positive rating outlook reflects Moody's expectation that recent operating improvement will continue over the next 1-2 years and balance sheet metrics will at least be maintained.

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