Fitch Ratings last week downgraded its underlying rating for debt issued for Nebraska Methodist Health System Inc. to A-minus from A.
The agency downgraded about $36.8 million of outstanding Nebraska Investment Finance Authority health facilities revenue bonds and about $12.2 million of outstanding Iowa Finance Authority revenue debt. The bonds carry MBIA Insurance Corp. insurance, and Fitch's outlook on the credit is stable.
The health system operates Nebraska Methodist in Omaha with 321 beds and Jennie Edmundson Memorial in Council Bluffs, Iowa, with 137 beds. It reported total operating revenue of $467 million in 2004 and saw negative operating income of about $6.5 million in 2002 and 2003, and $14.6 million 2004, according to Fitch.
The system's inpatient admissions dropped, primarily at Jennie Edmundson, while lower patient volume at Nebraska Methodist also contributed to the large operating deficit in 2004, analysts Keith Dickinson and Joe Korleski wrote in a news release.
The health system started a three-year operational improvement plan in 2004, including reducing the number of employed physicians, staff, and clinic locations, and restructuring physician contracts. It budgeted a $6 million operating income for 2005.
Fitch analysts remained uncertain whether Nebraska Methodist would meet an operating-improvement target, but said they believed the system would maintain recent improvements in profitability.
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