Community financial outlook upgraded
Community Medical Centers’ financial outlook was upgraded from “negative” to “stable” by all three of the nation’s leading bond rating agencies. Fitch, Standard & Poors and Moody’s cited 10 months of strong financial performance, the hospital system’s newly negotiated managed-care contracts and confidence in the management team and its financial turnaround plans as key reasons for the revised outlooks.
In 2004 and 2005 the rating agencies had moved Community’s outlook to “negative,” in the midst of two straight years of negative bottom lines for the nonprofit system, the San Joaquin Valley’s largest hospital organization.
“It’s still too early to say we’ve completed a turnaround,” said Steve Walter, Community’s chief financial officer. “But certainly things are headed in the right direction. Our operating performance has been strong for nearly a year now, and the financial ratings experts are acknowledging that.”
The three agencies reassessed Community in preparation for the hospital system’s refinancing of its current debt with the sale this spring of more than $300 million in new bonds. The bonds, called certificates of participation, will be issued through the Central California Joint Powers Health Facilities Authority composed of the cities of Fresno and Clovis.
“We’re planning to take advantage of very favorable interest rates by issuing new bonds,” Walter said. “We’ll restructure millions of dollars of existing debt, obtain additional cash for hospital improvements and generally improve our financial profile.”
This story was reported by Michelle Van Valkenburg. She can be reached at mvanvalkenburg@communitymedical.org.