DALLAS - Good Shepherd Medical Center in East Texas is in danger of losing its Baa3 investment-grade rating from Moody's Investors Service, analysts said.
"The placement of the rating under review is prompted by the severity of the system's downturn in financial performance through six months of fiscal year 2014," analysts Sarah A. Vennekotter and Daniel Steingart said in a May 19 report.
Unaudited results through March 31, 2014 show a $14 million operating loss, representing a negative 7.1% margin for the Longview hospital. That loss is significantly higher than budgeted, the analysts said.
A spokeswoman for GSMC had no immediate comment on the report.
Standard & Poor's last rated the nonprofit healthcare provider BBB-plus with a negative outlook in November.
Any rating action would affect $94 million of outstanding debt. The fixed and variable-rate bonds were issued through the Gregg County Health Facilities Development Corp. between 2002 and 2012.
The healthcare system issued $38.8 million for its hospital in nearby Marshall in 2010.
Moody's downgraded GSMC to Baa3 from Baa2 in November and retained a negative outlook.
"The negative outlook reflects the increased competitive environment, as the competing hospital in Longview recently expanded its campus and recruited away several physicians from GSHS's medical staff," Moody's analysts said in November.
Good Shepherd Health System closed its 25-bed critical access hospital in Linden, Texas, April 30. Good Shepherd had operated the Linden hospital since 2005, with capital investments of more than $6 million.
"Even with community support and investment in quality personnel and equipment, patient activity was not at a sustainable level, and GSHS has incurred operating losses totaling over $12 million since the acquisition of the Linden hospital," said chief executive Steve Altmiller.
