Standard & Poor's last week downgraded outstanding debt issued for the Nebraska Methodist Health System to A-minus from A-plus, revising its outlook to negative from stable on the Omaha system.
The rating change resulted from low cash on hand caused by significant capital expenditures and affects bonds sold through the Nebraska Investment Finance Authority and Iowa Finance Authority.
The hospital system has seen its operations diminish in the past two years while competition has increased in its Omaha market, Standard & Poor's analysts said in a statement.
The system includes the 173-bed Jennie Edmundson Memorial Hospital in Council Bluffs, Iowa, and the Nebraska Methodist Hospital, a 341-staffed bed referral center in Omaha, among other holdings, the agency said.
The system's balance sheet has weakened considerably, Standard & Poor's analysts said. Nebraska Methodist has spent down its liquidity through investments in its plant, leaving it with just about 77 days cash on hand.
'The hospital had just $91 million in unrestricted cash and investments at Dec. 31, 2003, down dramatically from $175 million in 2000, as a result of increased pension contributions, poor investment market performance, significant capital outlays for service expansion, and negative operating results,' the analysts wrote.
The agency gave positive marksto the system for its strong debt service coverage of 4.6 times, low debt, solid operations at Nebraska Methodist, and a plan to turn around its operations, specifically at Jennie Edmundson.
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