Credit ratings agency Standard & Poors said it downgraded its rating of St. Charles Parish Hospital' general-obligation bonds by six notches and reduced its outlook to negative. The move relates to a criteria change in how S&P rates tax-secured hospital districts, which the agency announced in May.
The new criteria changed our approach to tax-secured hospital district debt by increasing the focus on the credit quality of a hospital in addition to the traditional tax-secured analysis, S&P said in a news release at the time.
Fred Martinez, chief executive officer at St. Charles Parish Hospital, Luling, La., for nearly 23 years, said the rating change is "very unfair."
"They have downgraded the bonds to the lowest level that you could rate a bond," Martinez said. "That's basically junk bonds."
Kevin Holloran, a Dallas-based analyst with S&P, said the change provides a more focused approach for looking at hospital districts. S&P analysts and representatives for 40-bed St. Charles Parish Hospital were unable to schedule a meeting in the spring, which explains why its rating was announced this week.
The rating is deeply speculative and it is more on hospital operations, Holloran said. They have a very, very weak cash position which does not give them flexibility. Its an operational struggle right now and something we will be watching closely, he added. Our worry is that when you are in this low of a cash situation, one bad event can really end up being a really bad event. -- by Jessica Zigmond
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