A national credit rating agency has elevated Owensboro Health’s bond rating outlook and has also signaled that a rating upgrade is possible within the next two years.
Fitch Ratings, which has dual headquarters in New York and London, affirmed the health system’s BB+ bond rating in an April 18 media release. The release also noted that Owensboro Health’s strong financial performance merits moving the system two-year outlook from “stable” to “positive.”
The Fitch report also noted that the system’s expected financial performance and growth could lead to a credit upgrade during the two-year outlook cycle.
According to Owensboro Health Marketing Director Brian Hamby, it is important for the community that Owensboro Health is financially stable.
“We recognize the importance of Owensboro Health to the region,” Hamby said. “People depend on us for their healthcare.”
After an evaluation in 2016 left Owensboro Health with a “stable” outlook, Hamby said hospital officials challenged the staff to maximize value and eliminate waste in order to pass cost savings on to patients.
“That is starting to pay off now,” Hamby said.
He explained that one of the key metrics Fitch Ratings used to evaluate Owensboro Health’s bond rating outlook was the number of days the hospital could survive with its cash on hand. In 2016, that was 103 days, marking the lowest cash on hand in recent history, Hamby said. As of last month, that was 176 days.
“We are really proud of that number,” Hamby said.
The bonds evaluated by Fitch Ratings are tied to the 2013 construction of the new facility on Pleasant Valley Road. Hamby said that the new rating improves the financial outlook of the hospital, providing financial strength if the organization were to make any moves in the market in the future.
Fitch’s release noted that the health system has a number of strengths that led to this improved outlook, like the growth in volumes and revenue related to the new Healthplexes in Henderson, Madisonville and Powderly. The report also noted growth in a number of service lines, including cardiology, gastroenterology, bariatric surgery and interventional radiology. Key relationships also bolstered the hospital, according to Fitch, specifically partnerships with the University of Kentucky Markey Cancer Center’s Research and Affiliate Networks and the University of Louisville to begin a family medicine residency program.
Owensboro Health President and CEO Greg Strahan said the system’s strong financial performance can be attributed to a team effort at all levels.
“Owensboro Health’s strategic framework places patients at the center of everything we do, with quality and safety as our foremost priorities,” Strahan said. “When we deliver safe, high-quality healthcare, all the other goals we are pursuing happen naturally. That is how we are going to continue to meet our mission to heal the sick and to improve the health of the communities we serve.”
