Moody’s joins Fitch in lowering Mary Washington Healthcare’s bond rating

Moody's has lowered the bond rating for Mary Washington Healthcare.

Moody’s Investors Service said that two years of declining admissions and weak financial performance were the reasons it  lowered the bond rating for Mary Washington Healthcare.  

Moody’s assigned a Baa1 rating to Mary Washington’s $264 million in outstanding bonds, down one grade from its prior rating of A3. Moody’s published the change on Sept. 13.

Moody’s is the second national ratings agency to reduce Mary Washington’s creditworthiness. Fitch Ratings made a similar one-step downgrade in July.

In its analysis of Mary Washington, Moody’s said that the hospital company has suffered from the difficult economy and from the competition posed by the 2010 opening of the Spotsylvania Regional Medical Center. Moody’s also termed the 2009 opening of Stafford Hospital as financially “challenging.” Stafford lost $22 million in 2009 and $14 million in 2010.

Another factor, according to both Moody’s and Fitch, was when Mary Washington lost sole-provider status from Medicare. Medicare changed the hospital’s status in January, resulting in an annual drop in revenue of $25 million.

Moody’s also changed the outlook for Mary Washington from “negative” to “stable.” The company said that Mary Washington’s management team is taking steps to cope with its declining profitability by expanding services and reducing costs. The company is still the dominant provider in what it termed a “vibrant, high growth, economically diversified area.”

(Moody’s analysis can be found here. A July story on the Fitch downgrade can be found here.)

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