Moody’s down­grades Texas sys­tem’s debt rating to spec­u­la­tive

Modern Healthcare - - REGIONAL NEWS - —Dave Barkholz

Moody’s dropped the debt rating of ETMC Re­gional Health­care Sys­tem to spec­u­la­tive grade, say­ing the hospi­tal com­pany needs to change its op­er­at­ing tra­jec­tory to avoid putting bond covenants at risk in early 2018.

Moody’s down­graded ETMC five notches from Ba1, which is just be­low in­vest­ment grade, to B3, a spec­u­la­tive rating in­di­cat­ing high risk. Moody’s out­look on the sys­tem re­mained neg­a­tive.

Based in Tyler, Texas, 11-hospi­tal ETMC has been post­ing op­er­at­ing losses and posted a mar­gin of neg­a­tive 6.9% in its fis­cal 2017 first quar­ter, ended Jan. 31.

More­over, ETMC is fac­ing volume pres­sures from its cross-town ri­val, Trin­ity Mother Frances Health Sys­tem, which was ac­quired in May by much big­ger Chris­tus Health. Chris­tus, with more than 50 hospi­tals and long-term­care fa­cil­i­ties, has the cap­i­tal to ex­pand ser­vices in the mar­ket, Moody’s said.

Though it has di­vested some ru­ral hospi­tals in re­cent years, East Texas still owns ru­ral hospi­tals that are suf­fer­ing from de­clin­ing pop­u­la­tions and eco­nomic trou­bles in the oil patch.

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