Aug. 04--Moody's Investor Services has upgraded its credit rating for Kettering Health Network based largely on the hospital company's ability to rein in expenses over the past two years and manage capital expenditures, the global rating agency said Tuesday.
According to Moody's, the ratings upgrade from "A1" to "A2" on about $397 million in debt reflects Dayton-based Kettering's strong operating performance in fiscal years 2013 and 2014.
Moody's attributed the ratings upgrade to Kettering's "impressive volume growth" in key areas, such as inpatient admissions, outpatient visits and total surgeries.
Kettering has also benefited from the expansion of Medicaid in Ohio under the Affordable Care Act, according to Moody's, which has a stable ratings outlook on Kettering.
As more Americans have signed up for Medicaid coverage under expansion, hospital companies have seen lower expenses for caring for the uninsured as well as a growing patient volumes. The U.S. Department of Health and Human Services projected hospitals nationwide would save $5.7 billion last year from serving fewer uninsured patients.
Kettering hasn't released numbers for fiscal 2014, but administrators have acknowledged that they have seen a reduction in charity and uncompensated care costs as well as an increase in Medicaid patients.
In addition to cost savings, Kettering has a strong market position and "manageable capital spending plans," according to Moody's.
"This upgrade by Moody's affirms Kettering Health Network's strategy to align best practices for patient care among our facilities," said Kettering President Terri Day. "This strategy helps us to continually improve quality while closely managing delivery costs. CEO Fred Manchur and I have worked closely with our leadership team to develop a road map that will help us achieve the highest levels of patient satisfaction, quality and safety, and financial performance."
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