Hoping to reverse its declining financial fortunes, Baylor Health Care System is shedding one hospital and building another.
The announcement comes five weeks after Baylor and Texas Health Resources, Irving, scrapped a longstanding plan to consolidate operations of their 18 hospitals under a mergerlike partnership (Nov. 8, p. 22).
In January, the Dallas-based system will shutter struggling Baylor Medical Center at Ellis County, Ennis, which has lost $14 million since 1992.
Also in January, Baylor will sell $48 million in bonds to fund the construction of its new heart hospital in downtown Dallas. The short-stay 27-bed hospital will be operated through a joint venture with physicians.
Both moves are part of a systemwide effort to cut costs and boost revenues in the face of operating losses that topped $21 million in fiscal 1999.
With investment income bumping up the bottom line to a positive $27 million, Baylor is in no immediate financial distress. But the five-hospital system can no longer subsidize losses at its smallest hospital, according to Baylor University Medical Center Chief Operating Officer Tim Parris.
The hospital's skilled-nursing unit was slated for closure, and the acute-care side had an average daily census of six.
Moody's Investors Service revised its outlook on the system's Aa3 bond rating to negative, affecting $365 million in debt. The rating agency cited operating losses and its view that "carving out and sharing key and profitable service lines" in the form of a joint-venture heart hospital do not enhance the system's credit profile.
Standard and Poor's lowered the system's ratings on $193 million in debt to AA- from AA.