Bondholders of King's Daughters Medical Center in Ashland, Ky., received notice this month that the hospital failed to file its annual report—capping off a challenging year that has already led to a credit-rating downgrade.
King's Daughters, the largest hospital by bed count in Kentucky, could not be reached for comment at deadline regarding why its financial report was delayed (PDF)
. The 612-bed hospital, which has a Sept. 30 fiscal yearend, will hold a call March 26 to provide an update for investors.
Fitch Ratings last month downgraded five series of bonds from A+ to A
with a negative outlook. The ratings agency cited a “significant deterioration in operating performance,” as both inpatient and outpatient volume decreased.
The hospital operates in a challenging region facing declining population growth and low household incomes. About 15% of its patients are on Medicaid and another 7% self-pay.
King's Daughters is also the subject of a U.S. Justice Department investigation into whether it complied with Medicare
criteria for implanting cardiac devices between 2006 and 2011 after a high number of procedures were performed.
In its first quarter ended Dec. 31, King's Daughters reported an operating loss of $17.7 million (PDF)
compared with a loss of $595,000 for the same period the prior year. Its operating margin declined to negative 15.7% compared with negative 0.5% for the first quarter of fiscal 2013.
Admissions fell 14.2% quarter over quarter.
The hospital in December named Kristie Whitlatch, its chief operating officer, as its new president and CEO (PDF)
, replacing Fred Jackson, who announced his retirement after 17 years leading the organization.
A financial improvement plan was implemented in late fiscal 2013 that focuses on its revenue cycle, staffing productivity, supply chain and service lines, Fitch said. A total of 300 full-time employees have been eliminated since August.Follow Beth Kutscher on Twitter: @MHbkutscher