MaineGeneral gets credit downgrade from Moody’s
Moody’s Investors Service has downgraded its rating on $281 million in MaineGeneral Medical Center bonds sold in 2011 to build the center’s new Augusta hospital, citing a downturn in the hospital’s recent financial performance.
Michael Koziol, the hospital’s chief financial officer, told the Bangor Daily News the downgrade came as a surprise and asserted that Moody’s has held an unfavorable outlook on the health care industry in general. The ratings service downgraded the bonds from an “investment-grade” rating of Baa3, to a “speculative-grade” rating of Ba1.
For the fiscal year ended July 2013, the hospital budgeted revenue of $16 million but only brought in $10.7 million, a difference Koziol said is due to higher-than-expected cuts to Medicare reimbursements and higher amounts of charity care and bad debt. Those problems, he said, are not unique to MaineGeneral.
With the new Augusta hospital on track for completion in November, the hospital anticipates $17 million in losses during this fiscal year.
The downgrade isn’t expected to have any immediate effect on the hospital, but Moody’s warned that MaineGeneral could face further downgrades if the hospital doesn’t meet its 2014 budget. Moody’s cited positive signs as well, noting that the new hospital project came in under budget and will be on line seven months ahead of schedule.
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