CHICAGO — Moody's Investors Service has revised its outlook on Minnesota-based Fairview Health Services' A3 rating to positive from stable in recognition of steady operating improvements.
The action impacts $827 million of debt sold through the city of Minneapolis and the Minnesota Agricultural and Economic Development Board.
The Sept. 10 outlook revision reflects Fairview's continued improvement in financial performance and growth in liquidity in fiscal 2013 for the second consecutive year following a downturn in margins and liquidity in fiscal 2011.
The system also benefits from its strong reputation as the academic medical center for the University of Minnesota, a favorable market position in the Twin Cities metro area, and an advanced care model that should help Fairview in better manage its patient populations.
"The revision of the rating outlook to positive from stable reflects the durability of the improvement as performance through the first six months of fiscal 2014 remains on par with fiscal 2013 levels," Moody's wrote. "Continued favorable performance and maintenance of balance sheet metrics in the coming year could result in a rating upgrade at our next review."
The system saw its unrestricted cash and investments grow to $1.3 billion in fiscal 2013 from $1.1 billion in fiscal 2012. Unrestricted cash and investments totaled $1.4 billion in June. The system generates $3.4 billion in operating revenue annually from five hospitals in the region.
Its challenges include operating in a competitive region and below average balance sheet measures for its rating level.