DALLAS — Standard & Poor's downgraded Parkland Health and Hospital System to AA from AA-plus on March 31, a day after dedication of a new $1 billion Dallas hospital built largely with Build America Bonds.
"The lowered rating reflects our view of the district's weaker liquidity position and lack of a well-defined plan to achieve healthier operating margins," said Standard & Poor's credit analyst Jennifer Garza.
It was the second S&P downgrade since Parkland issued $705 million of bonds in 2009 to build the new hospital. The rating fell from AAA on Nov. 5, 2013 amid uncertainties about health care reform and the hospital's liquidity.
Fitch Ratings dropped its AAA rating to AA-plus in July 2013.
Garza also noted Parkland's "lack of political willingness to increase the operational tax rate beyond the 2015 level, as communicated to voters" and "moderately high overall net debt burden."
"The stable outlook is based on our view of the stability of the underlying health care assessment, the longer-term stability of the management team, with all interim positions filled with full-time, permanent hires within the past 12 months, and our expectation that management will achieve structurally balanced operations over the long term," Garza wrote.
Although the hospital operates and manages its budget under its own board, the Dallas County Commissioners also provide supervision.
The new 862-bed hospital across the street from the old Parkland is expected to open Aug. 20. Dedication ceremonies took place March 30, with more than 400 community leaders, elected officials and donors appearing at invitation-only event.
For generations, Parkland has been at the forefront of public healthcare in America," said Fred Cerise, MD, MPH, Parkland's president & CEO. "The legacy of this institution is cemented as an innovator in providing quality care for the medically underserved, a leader in clinical expertise in specialties like burns and trauma, and as a pioneer of 21st century transformational care processes."
U.S. Rep. Eddie Bernice Johnson, D-Texas, who is also a registered nurse, told the crowd Parkland's service extends beyond the new building.
"Parkland is all over this community, with all kinds of programs supporting community groups to make sure quality care is delivered," she said.
