The acquisition of St. Francis Hospital and Medical Center and its affiliated hospitals has led Fitch to downgrade parent Trinity Health’s outlook to negative. Fitch said Trinity Health’s growth and potential staffing problems are reasons for concern.
In its report, the ratings firm said it is concerned by the impact of higher labor and staffing costs resulting from higher volumes and growing competition for nursing staff combined with an unfavorable shift in payer and service mix. It added should management be able to generate margin improvement more consistent with historical performance, a revision of the outlook to stable is likely.
Trinity Health Credit Group (formerly CHE Trinity) is the second largest nonprofit healthcare provider in the U.S. with approximately $14.3 billion in total revenue and operating 56 hospitals in 21 states with more than 113,000 employees. Fitch said the ‘AA’ rating reflects the benefits that accrue from the system’s size, scope of operations, and geographic diversity, which it believes helps insulate the organization from adverse economic events that could severely affect any of its core markets.
Trinity Health New England includes Saint Francis Hospital and Medical Center and Mount Sinai Rehabilitation Hospital, both in Hartford, and Sisters of Providence Health System, and its affiliate Mercy Medical Center, in Springfield, Mass. The merger of Johnson Memorial Hospital in Stafford Springs was completed on Jan. 1.
When the Trinity-St. Francis acquisition closed Oct. 1, Trinity paid off St. Francis’ $246 million in long-term debt accumulated from a number of previous capital projects, including construction of its John T. O’Connell Tower in 2011 and a 10-story patient care tower built in the 1990s.
