Boston-based Partners HealthCare posted a $22 million operating loss in 2014, its first financial loss in 15 years, and two Wall Street investment houses recently expressed concern about Partners' finances as the organization plans to sell $585 million in bonds next week, according to a report from The Boston Globe.
Partners attributed its operating loss in 2014 to problems with is health insurance business. Neighborhood Health Plan, which Partners acquired in 2012, lost $110 million last year. Additionally, per state insurance rules, Partners set aside $91 million as a "premium deficiency reserve," the report reads.
Along with the two Wall Street investment houses expressing concern over the organization's planned bond issuance, Partners President and CEO Gary L. Gottlieb, MD, is stepping down this year, and Partners' "efforts to acquire three local hospitals have been hotly contested," according to the report.
Last week, Moody's Investors Service assigned "Aa3" ratings to Partners Healthcare System's $580 million of series 2015 bonds and downgraded the ratings on the system's existing debt to "Aa3" and "Aa3/VMIG 1" from "Aa2" and "Aa2/VMIG 1."
According to the report, the downgrade "potentially (increases Partners') borrowing costs marginally."
Standard & Poor's Rating Service affirmed Partners' "AA" rating, but added a negative outlook, while Fitch Ratings affirmed its "AA" bond rating for Partners, according to the report.
However, Peter K. Markell, executive vice president of administration and finance, CFO and treasurer at Partners HealthCare Systems, was optimistic during the annual J.P. Morgan Healthcare Conference this week, saying Partners hospitals continue to be profitable, according to the report.
According to the report, Partners "is considering whether to divest Neighborhood Health or find another health care player to help shore up the insurance plan's finances."
Mr. Markell said in the report that Partners also is trying to expand its healthcare services outside of Massachusetts.
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