Moody’s Investors Service has revised its outlook to stable from negative on the University of Iowa Hospitals & Clinics Aa2 rating due to the system’s improved operating performance.
The action affects $104 million of rated debt. Analysts said revised debt plans from a prior review also affected the outlook shift. The Iowa City-based system’s credit strengths include its affiliation with the Aa1-rated University of Iowa, a strong relationship with its medical school and faculty practice group, a solid clinical reputation, and unique market position as the only academic medical center in the state.
Its challenges include a decline in inpatient admissions and Medicaid rate cuts, its operation in a competitive market, and a highly unionized workforce.
UIHC has deferred some key capital projects in recent months. In Moody’s prior review, the system was considering constructing a stand-alone children’s hospital but has deferred that plan for at least five years.
The hospital is still planning the construction of a $70 million ambulatory medical office building over the next year that will rely on $50 million of new borrowing in fiscal 2010 and 2011.
