MaineHealth Earns Strong Credit Ratings Ahead of Issuing Bonds
Two credit rating agencies have affirmed the strong financial position of MaineHealth, northern New England’s largest healthcare system, as the organization readies itself to borrow for an expansion project at its flagship hospital.
Moody’s Investors Service this week assigned a rating of A1 to the first component of approximately $300 million in bonds to be issued by MaineHealth for a $512 million project at Maine Medical Center. Rating agency Standard & Poor’s, meanwhile, said this week it would maintain its rating of A+ with a stable outlook for the healthcare system as the initial bonds are issued.
The ratings place MaineHealth in the top tier of New England health care systems. Only Partners HealthCare, the system parent of Massachusetts General Hospital, and Yale New Haven Health in Connecticut have stronger financial ratings.
At a time when many rural health care organizations have struggled, MaineHealth has consistently exceeded its financial goals, largely on the strength of Maine Medical Center, the state’s largest tertiary care center. However, Bill Caron, president and CEO of MaineHealth, also credited member organizations across the system, noting the rating agencies looked favorably on the work being done at the system’s smaller hospitals under challenging circumstances.
“Some of our local health systems are operating in very difficult environments. Rural communities have a higher proportion of patients with Medicare and Medicaid coverage, which doesn’t always pay the full cost of care. They are also challenged by the migration of complex procedures, and the dollars they generate, to larger medical centers due to technology,” said Caron.
To cope with these pressures on rural health systems, MaineHealth is moving to create a unified operating, financial and governance model, allowing local health systems to more easily share resources across the system. This “unification” initiative was discussed extensively in local communities in 2017 and ultimately approved by member boards. This year, MaineHealth is working through the mechanics of bringing its members together in a formal way on Jan. 1, 2019.
Both Moody’s and Standard & Poor’s cited the pending governance and corporate restructuring at MaineHealth as steps that will strengthen the system’s long-term financial outlook. The agencies also said the investment in Maine Medical Center should position the hospital system to meet patient demand in future years.
In its rating announcement Moody’s said unification would “strengthen overall system governance and management and drive efficiencies over time.” Standard & Poor’s announcement cited “MaineHealth’s robust enterprise profile with a dominant presence in southern, western and coastal Maine, including in Portland where Maine Medical Center’s (MMC) business and financial growth leads the system.”
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