Fitch Ratings lowered its already low rating for West Penn Allegheny Health System to CCC from B+, a multi-notch drop, as the chance of debt restricting grows and an acquisition by Highmark looks less certain.
The news came as the financially strapped health system and Highmark, a Pittsburgh insurer, went before a Pennsylvania judge for a hearing on West Penn Allegheny's recent bid to back out of its acquisition by Highmark in order to search for another buyer. The system announced the deal was off in late September and Highmark quickly sued to stop West Penn Allegheny from talking to new suitors.
Read more »
Permalink | Post a Comment
One major credit rating agency upgraded more not-for-profit hospitals and systems than it downgraded between July and September, and deals—mergers, acquisitions and leases—were behind better credit in several cases.
Moody's upgraded 12 not-for-profit healthcare borrowers with $3.2 billion in outstanding debt last quarter compared with the seven downgraded borrowers with $957.3 million of debt, Moody's said in a new report.
Indeed, deals have been so numerous and have so influenced credit that Moody's Investors Service now says it was wrong earlier this year when it said that 2012 would likely close with more downgrades than upgrades. The year may end with an equal number of each, the report said. “We're not prognosticators here,” said Moody's associate analyst Carrie Sheffield. “We do have a negative outlook for the sector” and analysts expected to see more downgrades than upgrades, she said.
Read more »
Permalink | Post a Comment
Later this week, Catholic Health Initiatives is expected to enter the taxable market to borrow $1.5 billion, joining a string of not-for-profit systems that have bypassed tax-exempt debt thanks to the flexibility and recent favorable rates found in taxable markets.
“Tax-exempt debt is a really terrific, low-cost financing vehicle, but it's a lot more difficult to accomplish because of the way the rules work,” said Linda MacDonald, vice president of treasury services for the Englewood, Colo.-based system. Taxable debt allows borrowers to move more quickly, she said.
Tax-exempt debt also has restrictions on how it can be used that don't exist for taxable debt. To be financed with tax-exempt bonds, acquisitions and other assets that require capital investments cannot be for-profit. Borrowers must limit the for-profit use of projects financed by tax-exempt bonds to 5% until the bond is paid off.
Read more »
Permalink | Post a Comment
New court records in the disputed breakup of West Penn Allegheny Health System and Highmark suggest that the system's continued financial distress left the insurer with a nagging sense of buyer's remorse.
Highmark, which last year agreed to acquire West Penn Allegheny for $400 million in grants and loans and another $75 million commitment to medical education, presented the health system in August with analysis “suggesting that Highmark is overpaying for West Penn Allegheny,” according to the health system's latest court filings.
The pair ended up in court this month after Highmark sued to stop West Penn Allegheny from looking for a new buyer. West Penn Allegheny said in late September it would seek a new buyer after Highmark demanded new terms and insisted the system restructure its debt in bankruptcy.
Read more »
Permalink | Post a Comment
Chilton Hospital officials saw greater access to capital for ambulatory expansion, information technology and other investments to prepare for accountable care as one compelling reason to join a larger health system.
Another reason: The possible arrival in New Jersey of the joint venture between Ascension Health Alliance and the private equity firm Oak Hill Capital Partners to build a Catholic for-profit health system.
Deborah Zastocki, president and CEO of Chilton Hospital, said the independent hospital, which announced board approval for a merger with Atlantic Health System this week, reconsidered its solo status in response to changes in healthcare delivery, but also potential changes to New Jersey's healthcare marketplace.
Read more »
Permalink | Post a Comment
Policymakers who hope to see hospitals respond to financial incentives for better quality care will be disappointed by a newly published report on costly, potentially deadly, hospital-acquired infections.
My colleague Maureen McKinney reported on the results, published in the New England Journal of Medicine: The 2008 Medicare policy to stop payment for catheter-associated bloodstream and urinary tract infections contracted by patients during a hospital stay did not produce a hoped-for drop in infection rates.
The rate of bloodstream infections, on the decline before the policy change, continued to drop at about the same pace as before the pay cut, the researcher said.
Read more »
Permalink | Post a Comment
The week began with the start of Medicare's penalties for hospitals with higher-than-average rates of heart attack, heart failure and pneumonia patients who leave the hospital only to return within 30 days.
But Medicare is not the only payer to penalize hospitals for repeat visitors. Medicaid, in some states, also cuts hospital payments based on readmissions. As we reported in late September, changes to Medicaid policy have increased financial incentives for hospitals to reduce hospital admissions.
Now Massachusetts Medicaid is scheduled to increase its readmission penalties starting Nov. 1. The state began in 2011 to cut payments by 2.2% for hospitals with excess readmissions.
Read more »
Permalink | Post a Comment
The three major players in Pittsburgh's healthcare market—West Penn Allegheny Health System, Highmark and the University of Pittsburgh Medical Center—have a combative and litigious history (for a review, see here). Now, the possible breakup of an alliance between West Penn Allegheny and Highmark, an insurer, has landed two of those players back in court.
Highmark said in court filings this week that West Penn Allegheny had no grounds to exit the deal the partners signed almost a year ago. (“It is truly sad that Highmark has taken this step,” West Penn Allegheny responded.)
Under the deal in dispute, Highmark would acquire the health system and West Penn Allegheny would receive desperately needed cash.
Highmark began immediately to pour cash into the struggling system, which has continued to see its operations deteriorate since the deal was announced. West Penn Allegheny lost $87.8 million on operations between June 2011 and March 31, the most recent financial information available. That's compared with a $35.1 million loss for the same nine months the prior year.
Read more »
Permalink | Post a Comment
