The assessment of a hospital’s credit rating, much like other credit ratings, involves an independent evaluation of its creditworthiness. Multiple factors come into play, with the enterprise and financial profile standing out as the most significant considerations.
In 2021, several hospitals in the United States experienced credit rating upgrades, including AnMed Health in Anderson, South Carolina, which saw its rating rise from “A+” to “AA-“. The upgrade was attributed to AnMed‘s unwavering solid operating performance and prominent market position within a stable service area. During the pandemic, the hospital showcased robust cost flexibility, leading to an impressive operating EBITDA margin of 11.8 percent in fiscal 2020.
As of May 2023, AnMed‘s elevated rating was reaffirmed, with continued strong operations expected. The hospital recently completed the consolidation of its two acute care campuses, yielding greater efficiencies and benefiting from its designation as the sole community provider.
AnMed‘s performance remained strong throughout the pandemic and labor market pressures, driven by resilient volumes, growth in expanded care sites, inpatient consolidation efforts, effective cost management, and recent labor pressure relief.
Looking ahead, the rating’s five-year forward-looking scenario analysis anticipates sustained operating strength driven by strategic outpatient growth, improved accessibility, and the fortitude of core service lines. Even with planned additional debt of up to $100 million, AnMed‘s financial profile aligns with the rating category when subjected to stress analysis.
However, rating agencies cautioned that while not expected, weaker financial performance or extensive additional borrowing beyond current plans leading to cash-adjusted debt dropping below 120% for an extended period could exert pressure on the rating.
Stay tuned for the subsequent parts of this series as we delve deeper into the intricacies of hospital projects rating. Discover the key factors that shape a hospital’s creditworthiness and how these assessments impact healthcare institutions’ financial stability and growth prospects.