Fitch Ratings announced today it has upgraded the credit ratings of Community Health Systems in Franklin, Tenn., and Dallas-based Tenet Healthcare.
CHS' credit ratings were upgraded to B+ from B with a stable rating outlook, and the rating applies to the $9.3 billion of debt CHS had at the end of March 31, 2012. Tenet's debt was upgraded to B from B-, also with a stable rating outlook, and it applies to the $4.5 billion of debt Tenet had as of Dec. 31, 2011.
In CHS' report, Fitch said CHS' financial flexibility has improved in recent years, and the for-profit hospital operator's recent debt refinancing improved its "solid" liquidity profile. Fitch also noted CHS has generated free cash flow of about $454 million in the past year, and CHS stayed active in 2011 by spending $415 million to complete four hospital transactions.
Tenet's credit moved up to B status after Fitch analysts determined Tenet had made progress improving its financial flexibility. Like CHS, Tenet extended debt maturities and refinanced billions of dollars of its higher-cost debt, and Tenet has also experienced higher admissions and operating results.
However, there are still caveats with each for-profit hospital operator. Fitch said CHS still has to shake off heightened regulatory scrutiny that arose last year regarding its patient admission policies and accusations of overbilling Medicare. Tenet had a free cash flow of negative $2 million last year, and delayed Medicaid payments and litigation expenses are to blame, according to the report.
In January, Fitch analysts also indicated year-over-year operating trends remained weak for Fitch-rated for-profit hospitals in the third quarter of 2011, and it appears unstable patient volumes, weak payor mixes and low government payor reimbursements will continue in 2012.
CHS' credit ratings were upgraded to B+ from B with a stable rating outlook, and the rating applies to the $9.3 billion of debt CHS had at the end of March 31, 2012. Tenet's debt was upgraded to B from B-, also with a stable rating outlook, and it applies to the $4.5 billion of debt Tenet had as of Dec. 31, 2011.
In CHS' report, Fitch said CHS' financial flexibility has improved in recent years, and the for-profit hospital operator's recent debt refinancing improved its "solid" liquidity profile. Fitch also noted CHS has generated free cash flow of about $454 million in the past year, and CHS stayed active in 2011 by spending $415 million to complete four hospital transactions.
Tenet's credit moved up to B status after Fitch analysts determined Tenet had made progress improving its financial flexibility. Like CHS, Tenet extended debt maturities and refinanced billions of dollars of its higher-cost debt, and Tenet has also experienced higher admissions and operating results.
However, there are still caveats with each for-profit hospital operator. Fitch said CHS still has to shake off heightened regulatory scrutiny that arose last year regarding its patient admission policies and accusations of overbilling Medicare. Tenet had a free cash flow of negative $2 million last year, and delayed Medicaid payments and litigation expenses are to blame, according to the report.
In January, Fitch analysts also indicated year-over-year operating trends remained weak for Fitch-rated for-profit hospitals in the third quarter of 2011, and it appears unstable patient volumes, weak payor mixes and low government payor reimbursements will continue in 2012.
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