Meriter Hospital's Outlook Now Negative

Moody’s Investors Service has revised its outlook on Meriter Hospital’s A1 rating to negative from stable ahead of a private placement of debt.

The revision affects $99 million of rated outstanding debt issued through the Wisconsin Health and Educational Facilities Authority.

Meriter Health Services has another $110 million of unrated debt.

The analysis considered the financial performance of the larger system, of which the hospital represents about 79% of assets and 52% of MHS total operating revenues.

Physicians Plus Insurance Corp., a for-profit health maintenance organization that MHS holds a 67% stake in, accounts for the majority of remaining MHS revenues.

Moody’s affirmation of the rating reflects the hospital’s good market reach in a quality service area around Madison bolstered by adequate balance sheet and debt coverage ratios.

The revised outlook stems the system’s depressed operating cash flow margin in fiscal 2010 and 2011, due largely to challenges with the system’s health plan and a continued significant ramp-up in MHS’s employed physician practice.

The hospital competes with the University of Wisconsin Hospitals and Clinics and St. Mary’s Hospital, which is part of SSM Health Care.

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Healthcare industry Wisconsin
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