Moody's Investors Service said it has downgraded to B1 from Ba3 the long-term bond rating assigned to Hopkins County Hospital District, Texas's (HCHD) $22.7 million of outstanding Series 2008 fixed rate hospital revenue bonds.
The outlook remains negative at the lower rating level. The downgrade and negative outlook are due to a marked decline in liquidity and continuation of low operating performance.
HCHD owns and operates Hopkins County Memorial Hospital (HCMH), a 54-staffed bed acute care hospital located in Sulphur Springs, Texas.
The rating downgrade is attributable to a weakening of HCHD's balance sheet through a marked decline in liquidity and the continuation of low operating performance with declines in admissions and variability in other volume metrics.
Operating losses continue for the system, spearheaded by increasing losses by the expanding physician group and resulting in a decline in liquidity with the use of cash flow for debt service and capital.
The negative outlook is based on our concern for an ability to strengthen the balance sheet in both the near and longer term given the challenges to reimbursement, especially with Medicare representing 54% of gross revenues, and Medicaid with the reliance on supplemental funding for operations and the currently scheduled expiration of the 1115 Waiver program in 2016.
