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Despite low credit rating, Tomball hospital in good financial shape
By ANNA SCHUMANN
A recent report by Moody’s Investors Service affirmed that Tomball Regional Hospital’s rating is its lowest investment grade rating but hospital president and CEO Lynn LeBouef said this is good news in a bad economy.
According to Moody’s documents, ratings are the investor service’s opinions of the ability and willingness to make timely payments. Ratings are not recommendations to buy or sell and are not a guarantee that default won’t occur. The rating system has been in use since 1909.
Tomball’s rating of Baa3 is the lowest investment grade rating but is medium grade on the 21-notch scale. The highest rating of Aaa is “gilt-edged;” entities receiving the lowest rating of C have “extremely poor prospects of attaining any real investment standing.” LeBouef said the best comparison of the scale is a personal credit score; the better someone’s credit score, the better credit they can get.
LeBouef said maintaining the Baa3 rating the hospital has had for years is huge at a time when many hospitals are dropping in the rating scale. He credits the affirmation of the hospital’s rating to conservative investment strategies and a large market share. Because the hospital is a governmental entity, they are required to make only no-risk, secure investments. The nearly $500,000 in hospital losses absorbed due to Hurricane Ike was also factored into the rating.
The hospital hasn’t lost any investments due to the economy, LeBouef said; however, the hospital has seen spillover effects of the global crisis.
Normally in December, the hospital is overbooked with people wanting elective surgeries before the year’s end. This year, he said, people are hanging on to their money and the hospital has not had any scheduling issues.
One result of decreased volume was in October, the hospital laid off 28 of its 1,600 employees.
In the future, he said, the hospital will continue to make sure expenses are in-line and that staffing is adequate to patient volume. All current building projects including a new surgery center set to move-in ready by April will continue as scheduled.
In the Moody’s report, the not-for-profit healthcare sector outlook overall was downgraded from stable to negative. Hospital authorities such as the Tomball hospital, which are governmental entities but not supported but tax dollars, were categorized with not-for-profit entities though they have different investment strategies. The negative rating is a result of the economy in general, LeBouef said.
Had it been downgraded in its rating, it would have cost the hospital in terms of investing and would have resulted in higher interest rates.
“I am very pleased they affirmed our rating,” LeBouef said. “It shows we’re in a little better shape than others.”
According to Moody’s documents, ratings are the investor service’s opinions of the ability and willingness to make timely payments. Ratings are not recommendations to buy or sell and are not a guarantee that default won’t occur. The rating system has been in use since 1909.
Tomball’s rating of Baa3 is the lowest investment grade rating but is medium grade on the 21-notch scale. The highest rating of Aaa is “gilt-edged;” entities receiving the lowest rating of C have “extremely poor prospects of attaining any real investment standing.” LeBouef said the best comparison of the scale is a personal credit score; the better someone’s credit score, the better credit they can get.
LeBouef said maintaining the Baa3 rating the hospital has had for years is huge at a time when many hospitals are dropping in the rating scale. He credits the affirmation of the hospital’s rating to conservative investment strategies and a large market share. Because the hospital is a governmental entity, they are required to make only no-risk, secure investments. The nearly $500,000 in hospital losses absorbed due to Hurricane Ike was also factored into the rating.
The hospital hasn’t lost any investments due to the economy, LeBouef said; however, the hospital has seen spillover effects of the global crisis.
Normally in December, the hospital is overbooked with people wanting elective surgeries before the year’s end. This year, he said, people are hanging on to their money and the hospital has not had any scheduling issues.
One result of decreased volume was in October, the hospital laid off 28 of its 1,600 employees.
In the future, he said, the hospital will continue to make sure expenses are in-line and that staffing is adequate to patient volume. All current building projects including a new surgery center set to move-in ready by April will continue as scheduled.
In the Moody’s report, the not-for-profit healthcare sector outlook overall was downgraded from stable to negative. Hospital authorities such as the Tomball hospital, which are governmental entities but not supported but tax dollars, were categorized with not-for-profit entities though they have different investment strategies. The negative rating is a result of the economy in general, LeBouef said.
Had it been downgraded in its rating, it would have cost the hospital in terms of investing and would have resulted in higher interest rates.
“I am very pleased they affirmed our rating,” LeBouef said. “It shows we’re in a little better shape than others.”
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