Good Samaritan Hospital of Vincennes, Indiana, lost its investment grade rating from Moody’s Investors Service over its cash flow challenges and growing expenses.
The rating agency downgraded the Knox County-owned hospital to Ba1 from Baa3 impacting roughly $114 million of outstanding debt. The hospital has issued bonds through the Indiana Finance Authority and Knox County.
The outlook was revised to stable from negative after the downgrade.
“Thin cash flow will limit flexibility and prospects for meaningful liquidity growth and deleveraging a high debt burden,” Moody’s said.
The stable outlook reflects the hospital’s lead market position with limited competition and its low capital needs over the next several years that will limit demands on liquidity.
The hospital is facing increased costs under the Indiana Hospital Assessment Fee program. The program created by the state Legislature in 2011 is a way to increase federal matching dollars paid to Indiana’s hospitals through the federal-state Medicaid program, which pays for health care for poor people. The assessment fee program was reauthorized in both 2013 and 2017.
The hospital recently completed major campus construction and the acquisition and installation of a new electronic medical records system.
The hospital reported an operating income of $148,218 in the third quarter of 2018 compared to operating loss of $2.4 million. In fiscal 2017 it reported a loss of $1.7 million. Hospital net patient revenues have decreased to $56 million compared to $59 million in third quarter of 2017.
The hospital, located in Vincennes, Indiana, is the main hospital for Knox County, Indiana, and Lawrence County, Illinois. The Primary Care Clinic helps those who are uninsured. They also have their Community Health Services that serve Knox and the surrounding counties.
