Fitch downgrades hospital's $18M debt in broader surveillance review

As part of a continuing surveillance review process, an affiliate of St. Joseph Health Services of Rhode Island received a downgrade by Fitch Ratings, the ratings firm announced this week.

Fitch downgraded $18.8 million of series 1999 bonds issued by the Rhode Island Health and Educational Building Corp. from "B" to "BB-"--a single notch. The bonds remain in the non-investment grade category. Fitch says its overall outlook is stable.

St. Joseph lost $19.9 million in fiscal 2010. It lost another $1.7 million during the first five months of fiscal 2011. It operates 359-bed Our Lady of Fatima Hospital in North Providence.

St. Joseph's liquidity also reached new lows at the end of the fiscal 2010 year, with just $6.4 million, or 14.3 days, of cash on hand. Its inpatient admissions have declined 18 percent since fiscal 2008, with a similar dip attributed to outpatient procedures.

Fitch expects that St. Joseph's performance will gradually improve, related to an affiliation last year with Roger Williams Medical Center to form CharterCare Health Partners.

Because the rating downgrade is part of Fitch's overall surveillance reviews, there is the potential for hospitals or healthcare systems in a similar positions to see future downgrades of debt, as well.

To learn more:
- check out the Fitch press release
- read the Healthcare Finance News article