New York, November 14, 2012 -- Moody's Investors Service affirms Good Samaritan Hospital's (GSH) B1 bond rating, affecting $60.9 million of Series 1991 fixed rate bonds outstanding issued through the California Health Facilities Financing Authority. The outlook is revised to stable from positive.
SUMMARY RATING RATIONALE: The rating affirmation reflects: 1) GSH's stronger balance sheet with continued de-leveraging and growth in unrestricted liquidity due to material investment gains and to sizable proceeds from the state provider fee program; and 2) the expectation that the continuation of the state provider fee program will support core operations, capital expenditures and debt service payments and enable GSH to preserve unrestricted liquidity over the near term. The revision of the outlook to stable from positive reflects increased operating losses in fiscal year (FY) 2012 (excluding net proceeds from the state provider fee program) largely due to material inpatient admissions declines across all payers.
*High-end tertiary hospital (operating revenue base of $260 million and Medicare case mix index of 1.90 in FY 2012) located in downtown Los Angeles, CA
*Significant beneficiary under the California provider fee program as a large Medi-Cal provider (Medi-Cal accounts for 22% of gross revenues); GSH has received a combined nearly $23 million of net proceeds under the initial phase (21-month program) and second phase (6-month program); under the third phase (30-month program) GSH expects to receive approximately $40 million through FYE 2014
*As of August 31, 2012, unrestricted cash and investments grew to a peak $104.6 million, equating to further improved 157 days cash on hand, 172% cash-to-direct debt and 146% cash-to-comprehensive debt; the increase is due in part to favorable investment gains and receipt of net state provider fee program proceeds
*Presence of $44 million of additional unrestricted cash (excluded from Moody's calculations) from a land sale which could provide a short-term source of liquidity for operations and debt service, but is expected to be spent on a large medical office building and outpatient pavilion project beginning in FY 2013
*Conservative debt structure with all fixed rate debt and no interest rate swaps outstanding; no new debt planned at this time
*Defined benefit pension plan frozen to new employees since 1998; funded ratio based on projected benefit obligation is 85% at FYE 2012
*Hospital meets structural seismic requirements through 2030
*Increased operating losses in FY 2012 due primarily to large inpatient admissions decline across all payers and also to increased write off payments under Medicare recovery auditor contractor (RAC) audit (-6.8% operating margin and -0.9% operating cash flow margin excluding net proceeds under state provider fee program;-2.7% and 2.6%, respectively, including $9.0 million of net provider fee proceeds)
*Continued volatility in volumes due to continued sluggish economic environment and patients deferring elective procedures due to high insurance deductibles and co-pays; total inpatient medical and surgical admissions were down 15.5% and emergency room visits were flat, while outpatient surgeries were up a favorable 12.3% in FY 2012
*A history of inconsistent and weak operating performance reflective of a challenging payer mix; high combined exposure to government (Medicare 40.5% and Medi-Cal 21.9% of gross revenues) and self pay (7.5% of gross revenues) in FY 2012; payer mix is an ongoing concern given continued federal and state budget deficits, expected downward pressure on reimbursement across all payers and sluggish economic conditions; Management anticipates GSH will be in a relatively neutral position when the Medi-Cal program transitions from per diem to APR-DRG-based inpatient reimbursement effective July 1, 2013
*Reliant on supplemental government disproportionate share funding; GSH received a total of $21.8 million of Medicare DSH payments in FY 2012. The hospital does not qualify for
Medi-Cal DSH funding
*Small and very competitive primary service area consisting of 14 general acute care hospitals in a 4.5 mile radius; larger service area includes over 20 hospitals including several large, well-regarded tertiary and quaternary health systems
*Challenging labor environment; GSH is currently in contract negotiations with California Nurses Association (CNA) and Service Employees International Union (SEIU)
*Very high average age of plant (27 years) due to deferred capital needs; the hospital is currently in compliance with structural requirements but nonstructural requirements still need to be met under state seismic standards by 2030 deadline
The revision of the outlook to stable from positive reflects increased operating losses in FY 2012 (excluding net proceeds from the state provider fee program) largely due to large inpatient admissions declines across all payers,. The continuation of the California state provider fee program for an additional 30 months, together with GSH's improved cash balances, supports the stable outlook at the current rating level.
WHAT COULD MAKE THE RATING GO UP
Growth and stability of volume and revenues; improved operating performance and ability to sustain improved levels for multiple years; improved liquidity and debt coverage measures
WHAT COULD MAKE THE RATING GO DOWN
Decline in operating performance and larger operating losses; decline in unrestricted liquidity; weakening of debt coverage and liquidity measures; cuts in reimbursement
PRINCIPAL RATING METHODOLOGY
The principal methodology used in this rating was Not-For-Profit Healthcare Rating Methodology published in March 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Information sources used to prepare the rating are the following: parties involved in the ratings, public information, confidential and proprietary Moody's Investors Service's information, and confidential and proprietary Moody's Analytics' information.
Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.
Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Deepa Patel Analyst Public Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Bradley E. Spielman Vice President - Senior Analyst Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATIONS") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED,DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error negligent or otherwise or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations -- Corporate Governance -- Director and Shareholder Affiliation Policy."
Any publication into Australia of this document is by MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657, which holds Australian Financial Services License no. 336969. This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001.
Notwithstanding the foregoing, credit ratings assigned on and after October 1, 2010 by Moody's Japan K.K. ("MJKK") are MJKK's current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities. In such a case, "MIS" in the foregoing statements shall be deemed to be replaced with "MJKK". MJKK is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO.
This credit rating is an opinion as to the creditworthiness or a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be dangerous for retail investors to make any investment decision based on this credit rating. If in doubt you should contact your financial or other professional adviser.
Heute im Fokus
Facebook und Microsoft planen Internet-Kabel zwischen Europa und USA. Zwei weitere Spitzekräfte verlassen Kurznachrichtendienst Twitter. Philips streicht mit Börsengang der Lichtsparte 750 Millionen Euro ein. Kreise: Auktion für Bundesliga-TV-Rechte startet Montag.
In welcher Metropolregion leben am meisten Menschen?
Diese Aktien sind auf den Verkauflisten der Experte
Volatilität in Schwellenländern