Moody”™s Investors Service has given Westchester County Health Care Corp., operator of the Westchester Medical Center, a three-level upgrade in its bonds rating. The ratings service said the upgrade was due to improved management at the Valhalla hospital over the last several years and its long-standing relationship with county and state government.
Moody”™s analysts recently assigned an A3 rating to $472.6 million of the hospital”™s 2010 fixed-rate bonds and the same upgraded rating on $113.2 million of outstanding debt.
Although the 2010 bonds are not guaranteed by Westchester County, analysts at Moody”™s said the county”™s history of strong support for the medical center, especially in times of financial distress, led the ratings service to more closely align the public-benefit corporation”™s bond rating with the county”™s. The county has an Aaa rating, the highest rating given by Moody”™s.
Moody”™s said the upgrade also is due to the medical center”™s improved financial performance since 2005 with a senior management team “that brings credibility to the organization” and has shown a commitment to operating profitably by cutting costs and services.
Ratings analysts also noted the high demand for the center”™s tertiary and quaternary medical services as shown in its 80 percent occupancy rate and a favorable 2.32 Medicare case mix index, the highest in Moody’s portfolio. A case mix index rating greater than 1 lowers a hospital”™s average cost per patient.
Analysts cautioned, though, that the hospital will continue to be financially challenged by high Medicaid exposure and uncertain state funding levels. The medical center”™s annual reimbursement from Medicaid is down $94 million. Medicaid accounts for 30 percent of its payer mix and remains “a key credit issue,” Moody”™s analysts said.
Gary Brudnicki, senior executive vice president and chief operating and financial officer of Westchester Medical Center, said the hospital”™s bond rating is up five notches since 2005. Nationally, it was one of only a small number of upgrades received by the health care industry this year, he said.