BRADENTON, Fla. — The Chapter 11 bankruptcy filing of Clayton County, Ga.'s only hospital is a favorable credit factor for the county, according to Moody's Investors Service.
The Southern Regional Health System filed for reorganization on July 30 after years of financial stress, relieving the county of support for operations and indigent care, Moody's said in an Aug. 13 Weekly Credit Outlook.
"The bankruptcy filing is credit positive for the suburban Atlanta county as it will likely eliminate the need for the county to make annual operating transfers to the hospital," said Moody's analyst Pisei Chea.
Moody's rates Clayton County Aa2, with a positive outlook.
SRHS, a 331-bed hospital in Riverdale, is a component unit of the county, although the county is not legally required to support its operations, according to Moody's.
The county transferred $7.9 million in fiscal 2015, or about 4.25% of its general fund budget, to SRHS for indigent care, Moody's said.
"This marked the first time the county made a direct transfer to the hospital for operations," Chea said.
With the bankruptcy filing, the county will no longer make operating transfers to SRHS other than a $250,000 for the hospital pharmacy and $30,000 for the hospital's bankruptcy attorney retainer fee, Moody's said.
SRHS currently is a network member managed by Emory Healthcare, which is part of Emory University in Atlanta.
Southern Regional has signed a letter of intent to sell its assets to California-based Prime Healthcare Foundation, a nonprofit affiliate of for-profit Prime Healthcare Services Inc.
SRHS has about 1,600 employees.
The system joined more than a dozen Georgia hospitals that have filed for bankruptcy in recent years.
