Standard & Poor Downgrades Catholic Health Initiatives Bond Rating.

Operating losses recalculated as greater than reported.

[See also Addenda of Dec 19 & 20 below]

Perhaps it was predictable, but Standard & Poor’s bond rating service downgraded its rating of Catholic Health Initiatives from A+ to A with a negative outlook based on large and unexpected losses in first quarter FY 2015, and an inability to meet the financial targets needed to deal with last year’s losses. The downgrade effects the $7 Billion of existing CHI debt for which Kentucky’s operations are also on the hook. CHI pointed to challenges in a few of its markets (particularly Kentucky) investments in capabilities, and costs in implementing computerized medical record systems.

CHI’s own “unaudited” financial report declared a $134.7 Million operating loss, but S&P recalculated this to $641 Million. Expenses were up 11% while revenues grew only by 8%. As reported by Modern Healthcare, S&P’s analyst predicted that plans by Catholic Health Initiatives to turn around its operations likely won’t be enough to avoid losses for fiscal 2015 based in part on poor performance last year— “It’s just a big hole to dig out of… They missed on their targets last year. We didn’t feel like there was a strong track record to show they will do well.” Continue reading “Standard & Poor Downgrades Catholic Health Initiatives Bond Rating.”

Catholic Health Initiatives Loses $198 Million in First Quarter.

Kentucky operations show improvement.

CHI’s corporate first quarter financial update for the months July through September of 2014 was made public last Friday. The report was not good. There was a loss in patient care services of $122 Million that increased to $132 Million after “restructuring, impairment and other losses’” and was magnified further by non-operating losses to a total loss of $198 Million. This represents 5.4% of total operating revenues and is therefore meaningful. In the same quarter last year, there was a profit of $401 Million— a $599 Million swing in the wrong direction.

Last year CHI’s KentuckyOne operation was generating the greatest losses for the organization. This year its first quarter results showed a positive $1.7 Million profit. Of course, this is before “restructuring” or covering its share of national non-operating losses. I think it is safe to assume that KentuckyOne Health and any other Kentucky operations were paying out more money than they were bringing in. The KentuckyOne region remains at the bottom of the list of CHI regions in terms of operating income. Kentucky contributes substantial operating revenues, but its operating earnings margin is only 0.3% before all the adjustments. Continue reading “Catholic Health Initiatives Loses $198 Million in First Quarter.”

Catholic Health Initiatives Annual Report, FY 2014.

KentuckyOne Health still losing money– But how fast?

CHI riding a wave of acquisitions?

Once again Chris Otts of WDRB is first in our region to report on the release of Catholic Health Initiative’s (CHI’s) annual financial report for FY 2014. Data from the financial report shows continuing losses in CHI’s Kentucky operations of $69 million for the fiscal year ending June 30, amounting to a loss of 3.2% of Kentucky revenues. This compares to a modest profit of $33 million in FY 2013. I do not claim to fully understand such financial reports [help requested!], but Mr. Otts notes that the loss is stated before deducting financial expenses that would make the numbers worse. Continue reading “Catholic Health Initiatives Annual Report, FY 2014.”

KentuckyOne Health Is More Than “Talking” with Tenet Healthcare.

In with both feet. But how far?

26 July 2014, 3:30 pm

Reports that KentuckyOne Health was talking with Community Health Systems of Nashville about the sale of Jewish Hospital drew unequivocal denials from KentuckyOne. The hospital system and its partner, the University of Lousiville, finally broke silence and admitted that the couple had gotten off to an unanticipated (but perhaps not unpredictable) rocky start to their marriage. An additional report that Catholic Health Initiatives was talking with Tenet Healthcare has not been denied publicly to my knowledge, as of course it could not be. The fact is that Tenet is now fully engaged in providing services at Jewish Hospital. How much of the Jewish Hospital operation has been transferred to Tenet, and the ultimate outcome of the involvement of yet another out-of-state-corporation in Louisville remains to be seen.

There were of course any number of reasons CHI might wish to talk to Tenet. For one thing, since 2012, the two large corporations have been partners in jointly owned Conifer Health Solutions. Conifer specializes in “revenue-cycle” services for hospitals, including many, if not most of CHI’s. To my non-business mind, such services involve getting every last nickel that’s due out of patient billings. Since KentuckyOne Health has been losing money for CHI, it is not surprising that calls for outside help may well have been suggested or demanded. Continue reading “KentuckyOne Health Is More Than “Talking” with Tenet Healthcare.”