CHICAGO – Standard & Poor’s signaled that Fairview Health Services in Minnesota could win an upgrade over the next two years due to its strong business position and improved governance and management.

The rating agency revised its outlook last week to positive from stable on the system’s A rating. The system’s debt was issued using Minneapolis and the Minnesota Agricultural & Economic Development Board as conduits.

The revised positive recognizes “Fairview's improved governance and management and strengthened ties with the University of Minnesota and its associated physician organization," said Standard & Poor's credit analyst Ken Rodgers.

"It also reflects Fairview's fairly strong business position and relatively stable patient utilization and the anticipation that financial results and debt service coverage will remain strong leading to further improvement in liquidity while debt leverage is anticipated to remain at a low to moderate level,” Rodgers said.

Fairview, which has about $900 million of debt secured by a pledge of its unrestricted receivables, is one of the leading health care systems in the Twin Cities with $3.2 billion in total annual operating revenue.

Fairview and South Dakota-based Sanford Health had been in discussions over a possible merger but cancelled the discussions over the summer due to mounting opposition in Minnesota.

State Attorney General Lori Swanson, whose office regulates not-for-profits, along with some lawmakers and others had raised concerns over a possible acquisition of Fairview by the larger Sanford and the impact on the University of Minnesota Medical Center and Clinics. Fairview and the university are closely linked under a 1997 affiliation agreement that runs through 2026 and can be extended.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.