Seven-hospital Provena Health, Frankfort, Ill., saw its underlying long-term bond rating drop to Baa1 from A3 in a downgrade by Moody's Investors Service affecting $444 million in debt. Moody's also assigned a negative outlook to the bonds; however, the debt continues to carry a primary long-term rating of Aaa because of bond insurance. Moody's said it expects Provena's financial performance to remain depressed in 2002, reflecting "a nearly complete turnover of senior management in the past few months," among other factors. The credit-ratings agency said Provena's financial projections for 2002 are "overly optimistic" and cited an operating loss of $28 million in 2001 and a decline in cash on hand to 126 days from 201 days. The system has ended up $20 million to $30 million short of budget annually in each of the past four years, Moody's said. It also noted that Provena has had four different CEOs and CFOs since its 1997 formation. -- by Mark Taylor
Turnover a factor in system's ratings downgrade
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