DALLAS -- An uptick in patient volume and the November acquisition of Allegiance Health helped boost Detroit-based Henry Ford Health System's credit rating outlook.
Standard & Poor's revised its outlook on the health system to positive from stable Thursday, while affirming its A-minus rating.
The upgrade affects $366.6 million fixed-rate series 2006A and $303.4 million fixed-rate series 2009 bonds issued for the nonprofit healthcare operator by Michigan's State Hospital Finance Authority.
The rating reflects "a significant turnaround in fiscal 2015," said S&P credit analyst J. Kevin Holloran, "which management attributes to stable patient volumes and significant progress on its 'Strength & Sustainability' plan to reduce costs and improve value."
The five-hospital system captures about a 9% to 20% market share in the three-county Detroit service area of Macomb, Oakland, and Wayne counties.
Overall inpatient volumes improved by 1.1% in fiscal 2015 to 94,396 from 93,341 admissions in fiscal 2014. Henry Ford also has one the region's largest outpatient networks which combined for approximately 3.2 million outpatient visits in fiscal 2015, according to S&P.
The turnaround comes after multiple years of weak financial performance, stemming back to fiscal 2012.
At the beginning of April, Henry Ford completed the merger with Allegiance Health system that was first announced last November.
"The merger with Allegiance allows HFHS to extend its reach further west, add size and scale to the overall operation, and will also be accretive to the overall HFHS financial profile," said Holloran.
Jackson, Mich.-based Allegiance Health -- a 480-bed community-owned health system -- and Henry Ford announced Nov. 10 that they signed a letter of intent for Allegiance to join Henry Ford.
They said the merger allows the systems to better serve their communities in a post-federal healthcare reform universe. It also allows Henry Ford to expand its market area while it expands Allegiance's clinical services.
In September, Henry Ford announced plans to build a $110 million outpatient cancer center in Detroit's New Center area as part of a $500 million expansion. The outpatient oncology center will include a rooftop garden and skywalk to connect it to Henry Ford Hospital, the system's 802-bed flagship hospital in Detroit. The center is set to open in 2018.
William Schramm, Henry Ford's senior vice president of strategic business development said at the time of the announcement that funding for the oncology center will come from Henry Ford operations, supplemented by a possible bond offering with other projects, and money raised through philanthropy.
