Fitch affirms high bond rating for Backus
September 14, 2011
NORWICH – Despite a weak economy and overall negative outlook for hospitals, Fitch Ratings has affirmed The William W. Backus Hospital’s A+ bond rating with a stable outlook.
Bond ratings, a tool utilized by investors, are indicators of an organization’s financial ability to make interest payments and repay loans.
Fitch said Backus Hospital’s high rating is due to:
- A strong financial profile with only “modest” debt burden. ”The William W. Backus Hospital’s strong cash flow has resulted in robust balance sheet metrics with very good liquidity,” Fitch said. The hospital’s operating margin has averaged 4.2 percent over the past four years.
- An effective physician alignment strategy and good relations with physicians, resulting in a strong referral network in which nearly all of the physicians on its medical staff admitting exclusively at Backus.
- Leading market position: Backus controls 69 percent of the inpatient market share in its primary service area, and has broad placement of outpatient service locations in eastern Connecticut.
The main vulnerability Backus faces is its reliance on Medicaid, as reimbursement cuts are expected in coming years.
“This is great news for Backus and the community we serve,” said Dave Whitehead, President and Chief Executive Officer. “As a health system, our ability to meet the growing healthcare needs in eastern Connecticut depends on our financial stability. All Backus stakeholders should be commended for all they do to keep us strong, especially at a time when hospitals are facing financial pressures due to healthcare reform and one of the weakest economies most of us have witnessed in our lifetimes.”