Oroville (Calif.) Hospital, which has faced questions over whether it can pay for a $178 million expansion project, has been downgraded to "B" amid operating challenges and violation of certain financial covenants, S&P Global said Sept. 29.
Describing the hospital system's reserves as "vulnerable" with just 13 days' cash on hand as of May 31, S&P said Oroville could improve its situation over the next few months but remains under pressure, including from the new project.
"We believe that the hospital is in a tighter position given the weak balance sheet and pressured operating environment, in conjunction with a new tower opening in early 2024 and higher debt service payments required over the next few years, which could limit reserve growth, particularly if cash flow remains lighter," S&P said.
The outlook for the hospital system is negative given it has "very little financial cushion."
Oroville Hospital has not responded to multiple attempts by Becker's for further comment on its ability to pay for the expansion project now due to open next year.