Contact: Thomas Hottman
May 3, 2018 -- Fitch Ratings last week upgraded Sky Lakes Medical Center’s revenue bonds to “A” from “A-“ following an extensive review earlier this year.
The change is the latest in a series of bond rating upgrades over the past several years.
“An ‘A’ rating is remarkable for a small, rural, stand-alone, not-for-profit hospital,” said Rich Rico, chief financial officer at Sky Lakes. “It’s a better rating than some health systems with billions of dollars in revenue.”
Sky Lakes is among the first not-for-profit hospitals in the nation to be evaluated by Fitch under the agency’s new 2018 criteria, according to analysts.
The rating upgrade “is driven by the financial profile assessment...which indicated that Sky Lakes maintains good profitability (while) maintaining strong operations and liquidity,” the Fitch report states. Sky Lakes has “strong operating margins with minimal routine capital needs.”
“Because we’re not-for-profit, we reinvest our positive margin back into the organization and the community we serve,” Rico said. “For-profits distribute part of their profits among shareholders.”
In addition to being third-party validation for the organization’s financial health and fiscal policies, the rating upgrade “gives creditors and bond holders faith and confidence that Sky Lakes is on solid financial footing,” he said.
The upgrade also means a significant reduction in interest cost when bonds are issued or refinanced in the future, he added.
Proceeds from Sky Lakes bonds issued in 2016 will help fund the Sky Lakes Collaborative Health Center now going up on the medical center campus adjacent to Cascades East Family Practice Clinic. The project is expected to be completed in late 2019.
Sky Lakes reports gross annual revenue from patient services of approximately $600 million and net patient revenue of roughly $223 million with more than $26 million in uncompensated care. Licensed for 176 beds, the community-owned organization has nearly 1,500 employees, is internationally accredited, and offers a full range of inpatient and outpatient services, a home health agency, and a variety of primary care and specialty physician clinics.
Fitch Ratings is one of the three nationally recognized statistical rating organizations (NRSRO) designated by the U.S. Securities and Exchange Commission. Founded in 1914, the agency is dual-headquartered in New York and London.