The embattled Broward Health system has received more bad news. Moody's Investors Service last month downgraded its bond rating, citing changing leadership, heightened scrutiny on the system and losses from a recent legal settlement.
The downgrade—to Baa2 from A2—follows months of turmoil for the South Florida system. It reportedly faces state and federal investigations. Its CEO, Dr. Nabil El Sanadi, killed himself in January. And in September, Broward agreed to pay the government about $70 million to settle allegations it illegally paid doctors for referrals.
Art Wallace, the system's interim chief financial officer, said in a statement that Broward Health is disappointed by the downgrade but not surprised given recent events.
“We are dealing with a substandard start of the fiscal year and the financial impact of a $70.7 million settlement at the same time we adjust to the sudden loss of our CEO,” Wallace said. “The positive news is that the system and board are taking active steps to address both the leadership and financial issues.”
He said the system plans to start a search process soon for a permanent CEO. He also said Broward has entered into the corporate integrity agreement that was part of the settlement “on time and on target.” He said the first month of this year “looked more favorable,” and February business volumes were strong.
Moody's also assigned the system a negative outlook on its ratings that it said reflected “extremely thin cash flow during FY2016 without a clear plan for regaining operational balance, while in a period of significant senior leadership transition and external scrutiny.”