Independent monitor to oversee New Jersey hospital’s finances after 4-notch downgrade by Fitch

https://www.beckershospitalreview.com/finance/independent-monitor-to-oversee-new-jersey-hospital-s-finances-after-4-notch-downgrade-by-fitch.html

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New Jersey Gov. Phil Murphy issued an executive order directing the state’s health commissioner to appoint an independent monitor to oversee expenditures and the level of care provided at University Hospital in Newark, N.J.

The action comes after the public hospital’s bond rating was downgraded four notches by Fitch Ratings due to financial difficulties. The hospital also recently received a failing grade on quality of care from the Leapfrog Group and attempted to reduce its pediatric bed count without state approval, according to a press release from Mr. Murphy’s office.

“Given the scope of the problems found at University Hospital, these immediate actions are necessary to ensure the facility can continue providing the highest level of care to the community while it gets its fiscal house in order and improves its healthcare quality,’” said Mr. Murphy.

New Jersey Health Commissioner Shereef Elnahal, MD, appointed Judy Persichilli, BSN, RN, to serve as monitor. Ms. Persichilli is a veteran healthcare executive who most recently served as president of Livonia, Mich.-based CHE Trinity Health.

 

13 latest hospital credit rating downgrades

https://www.beckershospitalreview.com/finance/13-latest-hospital-credit-rating-downgrades.html

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The following nine hospital credit rating downgrades occurred in the last month. They are listed below in alphabetical order.

1. Boone Hospital Center (Columbia, Mo.) — from “A” to “A-” (Fitch)

2. Dignity Health (San Francisco) — from “A” to “A-” (Fitch)

3. El Paso (Texas) County Hospital District — from “AA-” to “A-” (Fitch)

4. Infirmary Health System (Mobile, Ala.) — from “A-” to “BBB+” (S&P)

5. King’s Daughters Medical Center (Ashland, Ky.) — from “A-” to “BBB-” (Fitch)

6. Lafayette (La.) General Health System — from “A-” to “BBB+” (Fitch)

7. Lahey Health System (Burlington, Mass.) — from “A” to “BBB+” (Fitch)

8. Lexington Medical Center (West Columbia, S.C.) — from “A+” to “BB+” (Fitch)

9. MedStar Health (Columbia, Md.) — from “A” to “A-” (Fitch)

10. Parkland Health and Hospital System (Dallas) — from “AA” to “AA-” (S&P)

11. Spartanburg (S.C.) Regional Health Services District — from “A” to “BBB” (Fitch)

12. St. John’s Riverside Hospital (Yonkers, N.Y.) — from “BB-” to “B-” (S&P)

13. University Hospital (Newark, N.J.) — from “BBB” to “BB-” (Fitch)

With the slew of downgrades from Fitch, it is important to note that the agency updated its credit rating criteria Jan. 9, 2018, for U.S. nonprofit hospitals and health systems. Under the updated criteria, the credit agency places a heightened emphasis on leverage and liquidity ratios and also considers operating leases and net pension liabilities debt equivalents.

Fitch reviewed 138 credit ratings, or about half of its portfolio of hospitals and health systems, due to the criteria changes. During the review, 25 hospitals (about 9 percent) were downgraded. Fitch does not believe the slew of downgrades is indicative of a wider, downward trend.

 

Moody’s: Nonprofit hospital rating downgrades rose sharply in 2017

https://www.beckershospitalreview.com/finance/moody-s-nonprofit-hospital-rating-downgrades-rose-sharply-in-2017.html

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Despite a strong economy and low uninsured population, nonprofit hospital rating downgrades sharply outpaced upgrades throughout 2017 — creating a downgrade-to-upgrade ratio of 3.4 to 1.0, which is more than double the 2016 ratio of 1.5 to 1.0, according to a new report by Moody’s Investors Service.

In 2017, there were 41 credit downgrades and 12 credit upgrades for nonprofit hospitals, compared to 32 credit downgrades and 21 credit upgrades in 2016.

Moody’s attributed the credit stress in 2017 to rising labor and supply costs coupled with a low revenue growth environment.

“An acute nursing shortage in many markets, along with rising supply and pharmaceutical costs, resulted in expense growth outpacing revenue growth for many hospitals and health systems,” the Moody’s report reads.

While hospitals of all sizes were downgraded, 60 percent of the downgrades in 2017 affected smaller health systems with less than $1 billion in total operating revenue. In addition, 12 of the downgrades occurred in Pennsylvania and Ohio, reflecting the lagging economy, aging demographics, competitive service area and commercial payer challenges in the Rust Belt area.

Although downgrades outpaced upgrades in 2017, Moody’s affirmed the vast majority of ratings in 2017, which is in line with historical trends.

Fitch: Rating downgrades will likely outweigh upgrades for US healthcare companies in 2018

https://www.beckershospitalreview.com/finance/fitch-rating-downgrades-will-likely-outweigh-upgrades-for-us-healthcare-companies-in-2018.html

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US healthcare companies will likely see more credit rating downgrades than upgrades in 2018, according to Fitch Ratings.

Fitch attributes the increased pressure on industry credit ratings to the uncertain future of the ACA, a changing tax plan, the adoption of alternative payment models and the potential for outsider disruption, which includes Amazon’s entrance into healthcare and advancements in technology.

Further, Fitch explains that technology is increasingly moving patients away from hospitals and enabling decentralization — thus reshaping the healthcare landscape. Due to this changing landscape, the healthcare industry is, “facing secular challenges to pricing power and profitability and these forces are expected to influence certain segments more than others in 2018,” Fitch notes.

However, despite the higher potential for credit downgrades, the US healthcare sector outlook is stable for 2018 due to sheer demand for services, an overall favorable liquidity profile, and generally consistent leverage and debt coverage.

 

S&P downgrades Care New England Health System’s rating to ‘BB-‘

https://www.beckershospitalreview.com/finance/s-p-downgrades-care-new-england-health-system-s-rating-to-bb.html

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S&P Global Ratings downgraded Providence, R.I.-based Care New England Health System’s rating to “BB-” from “BB.”

“The lower rating reflects CNE’s prolonged period of extremely weak financial performance, thin balance sheet metrics, and declining volume trends that portend deeper utilization challenges and competitive threats within its overall service market,” said Jennifer Soule, an S&P Global Ratings credit analyst.

The outlook is negative, reflecting uncertainties regarding CNE’s ability to shore up finances and close Pawtucket, R.I-based Memorial Hospital in a timely manner. In addition, S&P acknowledged CNE’s continued struggle to formalize a partnership with another provider.

Moody’s downgrades Albert Einstein Health Network to ‘Baa3’

https://www.beckershospitalreview.com/finance/moody-s-downgrades-albert-einstein-health-network-to-baa3.html

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Moody’s Investors Service downgraded Philadelphia- based Albert Einstein Health Network’s bond and issuer rating to “Baa3” from “Baa2,” affecting $447 million of outstanding debt.

The downgrade is a result of several factors, including the health system’s negative operating performance in fiscal year 2017, declining liquidity measures and uncertainty in state funding status. Moody’s also acknowledged the health system’s planned improvement strategies to bolster liquidity metrics.

The outlook is revised to negative from stable, reflecting the health system’s severe operating loss and declining liquidity in fiscal year 2017.

5 Ways the Graham-Cassidy Proposal Puts Medicaid Coverage At Risk

5 Ways the Graham-Cassidy Proposal Puts Medicaid Coverage At Risk

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The Graham-Cassidy proposal to repeal and replace the Affordable Care Act (ACA) is reviving the federal health reform debate and could come up for a vote in the Senate in the next two weeks before the budget reconciliation authority expires on September 30. The Graham-Cassidy proposal goes beyond the American Health Care Act (AHCA) passed by the House in May and the Better Care Reconciliation Act (BCRA) that failed in the Senate in July. The Graham-Cassidy proposal revamps and cuts Medicaid, redistributes federal funds across states, and eliminates coverage for millions of poor Americans as described below:
  1. Ends federal funding for current ACA coverage and partially replaces that funding with a block grant that expires after 2026. The proposal ends both the authority to cover childless adults and funding for the ACA Medicaid expansion that covers 15 million adults. Under Graham-Cassidy, a new block grant, the “Market-Based Health Care Grant Program,” combines federal funds for the ACA Medicaid expansion, premium and cost sharing subsidies in the Marketplace, and states’ Basic Health Plans for 2020-2026. Capped nationally, the block grant would be lower than ACA spending under current law and would end after 2026. States would need to replace federal dollars or roll back coverage. Neither the AHCA nor the BCRA included expiration dates for ACA-related federal funds or eliminated the ability for states to cover childless adults through Medicaid.
  2. Massively redistributes federal funding from Medicaid expansion states to non-expansion states through the block grant program penalizing states that broadened coverage. In 2020, block grant funds would be distributed based on federal spending in states for ACA Medicaid and Marketplace coverage. By 2026, funding would go to states according to the states’ portion of the population with incomes between 50% and 138% of poverty; the new allocation is phased in over the 2021-2025 period. The Secretary has the authority to make other adjustments to the allocation. This allocation would result in a large redistribution of ACA funding by 2026, away from states that adopted the Medicaid expansion and redirecting funding to states that did not. No funding is provided beyond 2026.
  3. Prohibits Medicaid coverage for childless adults and allows states to use limited block grant funds to purchase private coverage for traditional Medicaid populations. States can use funds under the block grant to provide tax credits and/or cost-sharing reductions for individual market coverage, make direct payments to providers, or provide coverage for traditional Medicaid populations through private insurance. The proposal limits the amount of block grant funds that a state could use for traditional Medicaid populations to 15% of its allotment (or 20% under a special waiver). These limits would shift coverage and funds for many low-income adults from Medicaid to individual market coverage. Under current law, 60% of federal ACA coverage funding is currently for the Medicaid expansion (covering parents and childless adults). Medicaid coverage is typically more comprehensive, less expensive and has more financial protections compared to private insurance. The proposal also allows states to roll back individual market protections related to premium pricing, including allowing premium rating based on health status, and benefits currently in the ACA.
  4. Caps and redistributes federal funds to states for the traditional Medicaid program for more than 60 million low-income children, parents, people with disabilities and the elderly. Similar to the BCRA and AHCA, the proposal establishes a Medicaid per enrollee cap as the default for federal financing based on a complicated formula tied to different inflation rates. As a result, federal Medicaid financing would grow more slowly than estimates under current law. In addition to overall spending limits, similar to the BCRA, the proposal would give the HHS Secretary discretion to further redistribute capped federal funds across states by making adjustments to states with high or low per enrollee spending.
  5. Eliminates federal funding for states to cover Medicaid family planning at Planned Parenthood clinics for one year. Additional funding restrictions include limits on states’ ability to use provider tax revenue to finance Medicaid as well as the termination of the enhanced match for the Community First Choice attendant care program for seniors and people with disabilities. Enrollment barriers include the option for states to condition Medicaid eligibility on a work requirement and to conduct more frequent redeterminations.
Much is at stake for low-income Americans and states in the Graham-Cassidy proposal. The recent debate over the AHCA and the BCRA has shown the difficulty of making major changes that affect coverage for over 70 million Americans and reduce federal funding for Medicaid. Medicaid has broad support and majorities across political parties say Medicaid is working well. More than half of the states have a strong stake in continuing the ACA Medicaid expansion as it has provided coverage to millions of low-income residents, reduced the uninsured and produced net fiscal benefits to states. Graham-Cassidy prohibits states from using Medicaid to provide coverage to childless adults. With regard to Medicaid financing changes, caps on federal funding could shift costs to states and result in less fiscal flexibility for states. States with challenging demographics (like an aging population), high health care needs (like those hardest hit by the opioid epidemic), high cost markets or states that operate efficient programs may have the hardest time responding to federal caps on Medicaid spending. Faced with substantially reduced federal funding, states would face difficult choices: raise revenue, reduce spending in other areas, or cut Medicaid provider payments, optional benefits, and/or optional coverage groups.

Last-Ditch Effort By Republicans To Replace ACA: What You Need To Know

http://khn.org/news/last-ditch-gop-effort-to-replace-aca-5-things-you-need-to-know/

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Republican efforts in Congress to “repeal and replace” the federal Affordable Care Act are back from the dead. Again.

While the chances for this last-ditch measure appear iffy, many GOP senators are rallying around a proposal by Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.), along with Sens. Dean Heller (R-Nev.) and Ron Johnson (R-Wis.)

They are racing the clock to round up the needed 50 votes — and there are 52 Senate Republicans.

An earlier attempt to replace the ACA this summer fell just one vote short when Sens. Susan Collins (R-Maine), Lisa Murkowski (R-Alaska) and John McCain (R-Ariz.) voted against it. The latest push is setting off a massive guessing game on Capitol Hill about where the GOP can pick up the needed vote.

After Sept. 30, the end of the current fiscal year, Republicans would need 60 votes ­— which means eight Democrats — to pass any such legislation because special budget rules allowing approval with a simple majority will expire.

Unlike previous GOP repeal-and-replace packages that passed the House and nearly passed the Senate, the Graham-Cassidy proposal would leave in place most of the ACA taxes that generated funding to expand coverage for millions of Americans. The plan would simply give those funds as lump sums to each state. States could do almost whatever they please with them. And the Congressional Budget Office has yet to weigh in on the potential impact of the bill, although earlier estimates of similar provisions suggest premiums would go up and coverage down.

“If you believe repealing and replacing Obamacare is a good idea, this is your best and only chance to make it happen, because everything else has failed,” said Graham in unveiling the bill last week.

Here are five things to know about the latest GOP bill: 

1. It would repeal most of the structure of the ACA.

The Graham-Cassidy proposal would eliminate the federal insurance exchange, healthcare.gov, along with the subsidies and tax credits that help people with low and moderate incomes — and small businesses — pay for health insurance and associated health costs. It would eliminate penalties for individuals who fail to obtain health insurance and employers who fail to provide it.

It would eliminate the tax on medical devices. 

2. It would eliminate many of the popular insurance protections, including those for people with preexisting conditions, in the health law.

Under the proposal, states could “waive” rules in the law requiring insurers to provide a list of specific “essential health benefits” and mandating that premiums be the same for people regardless of their health status. That would once again expose people with preexisting health conditions to unaffordable or unavailable coverage. Republicans have consistently said they wanted to maintain these protections, which polls have shown to be popular among voters.

3. It would fundamentally restructure the Medicaid program.

Medicaid, the joint-federal health program for low-income people, currently covers more than 70 million Americans. The Graham-Cassidy proposal would end the program’s expansion under the ACA and cap funding overall, and it would redistribute the funds that had provided coverage for millions of new Medicaid enrollees. It seeks to equalize payments among states. States that did not expand Medicaid and were getting fewer federal dollars for the program would receive more money and states that did expand would see large cuts, according to the bill’s own sponsors. For example, Oklahoma would see an 88 percent increase from 2020 to 2026, while Massachusetts would see a 10 percent cut.

The proposal would also bar Planned Parenthood from getting any Medicaid funding for family planning and other reproductive health services for one year, the maximum allowed under budget rules governing this bill. 

4. It’s getting mixed reviews from the states.

Sponsors of the proposal hoped for significant support from the nation’s governors as a way to help push the bill through. But, so far, the governors who are publicly supporting the measure, including Scott Walker (R-Wis.) and Doug Ducey (R-Ariz.), are being offset by opponents including Chris Sununu (R-N.H.), John Kasich (R-Ohio) and Bill Walker (I-Alaska).

On Tuesday 10 governors — five Democrats, four Republicans and Walker — sent a letterto Senate leaders urging them to pursue a more bipartisan approach. “Only open, bipartisan approaches can achieve true, lasting reforms,” said the letter.

Bill sponsor Cassidy was even taken to task publicly by his own state’s health secretary. Dr. Rebekah Gee, who was appointed by Louisiana’s Democratic governor, wrote that the bill “uniquely and disproportionately hurts Louisiana due to our recent [Medicaid] expansion and high burden of extreme poverty.”

5. The measure would come to the Senate floor with the most truncated process imaginable.

The Senate is working on its Republican-only plans under a process called “budget reconciliation,” which limits floor debate to 20 hours and prohibits a filibuster. In fact, all the time for floor debate was used up in July, when Republicans failed to advance any of several proposed overhaul plans. Senate Majority Leader Mitch McConnell (R-Ky.) could bring the bill back up anytime, but senators would immediately proceed to votes. Specifically, the next order of business would be a process called “vote-a-rama,” where votes on the bill and amendments can continue, in theory, as long as senators can stay awake to call for them.

Several senators, most notably John McCain, who cast the deciding vote to stop the process in July, have called for “regular order,” in which the bill would first be considered in the relevant committee before coming to the floor. The Senate Finance Committee, which Democrats used to write most of the ACA, has scheduled a hearing for next week. But there is not enough time for full committee consideration and a vote before the end of next week.

Meanwhile, the Congressional Budget Office said in a statement Tuesday that it could come up with an analysis by next week that would determine whether the proposal meets the requirements to be considered under the reconciliation process. But it said that more complicated questions like how many people would lose insurance under the proposal or what would happen to insurance premiums could not be answered “for at least several weeks.”

That has outraged Democrats, who are united in opposition to the measure.

“I don’t know how any senator could go home to their constituents and explain why they voted for a major bill with major consequences to so many of their people without having specific answers about how it would impact their state,” said Senate Minority Leader Chuck Schumer (D-N.Y.) on the Senate floor Tuesday.

Moody’s downgrades UPMC to ‘A1’

http://www.beckershospitalreview.com/finance/moody-s-downgrades-upmc-to-a1.html

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Moody’s Investors Service downgraded Pittsburgh-based UPMC from “Aa3” to “A1,” affecting $2.9 billion of debt.

In addition, Moody’s downgraded UPMC-Hamot’s bonds, which are parity obligations for UMPC, from “Aa3” to “A1.”

The downgrade is a result of several factors including UPMC’s rapid expansion project, high execution risk following the acquisition of Harrisburg, Pa.-based PinnacleHealth and a new service area with high competition. Moody’s also acknowledged UPMC’s increased debt burden, below average financial performance and suppressed margins. Offsetting an additional notch downgrade is UPMC’s strong market position, integration of various hospital acquisitions and core competency in acute care management.

The outlook is negative, reflecting Moody’s expectation that UPMC’s rapid expansion may pose financial and cultural stress.

11 recent hospital outlook and credit rating actions

http://www.beckershospitalreview.com/finance/11-recent-hospital-outlook-and-credit-rating-actions-070816.html

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