Fitch Ratings has downgraded Burlington, Mass.-based Tufts Medicine from a "BBB" to a "BBB-" credit rating.
The rating agency said in a Feb. 26 report that the downgrade "reflects the slower than expected improvement to TM's operating performance, including another year of significant operating losses, coupled with a year over year decline in unrestricted cash and investments."
Fitch said the health system is moving forward on an accelerated turnaround plan that has been significantly updated in the past year, with expectations of achieving a positive operating EBITDA margin run rate in fiscal year 2024 and a breakeven operating margin run rate by fiscal year 2025. Fitch said it has reviewed the plan and met with Tuft's senior management.
"The turnaround plan focuses on cash stabilization, length of stay, revenue cycle, contract labor, group purchasing and other initiatives," the agency said in the report. "Fitch believes the plan's goals are reasonable and that a reinvigorated senior management team, with the new CFO, who has extensive turnaround experience, including successfully working with some of the consultants engaged for parts of TM's turnaround plan, can achieve its stated targets."
Tufts has a stable outlook with Fitch, which said it also considered the health system's strong clinical reputation, large physician group and the high acuity of the services it provides at its Boston-based academic medical center to determine its rating.