Monday May 20, 2013
More positive news for Beacon Health System, the new parent company overseeing Elkhart General Hospital and Memorial Hospital of South Bend.
Fitch Ratings earlier this month issued a report praising the 2011 merger of the two non-profit hospitals under the newly formed Beacon banner, a process the entities dubbed affiliation. It gave Beacon’s planned 2013 bond issues an AA- rating, upgraded EGH’s Series 2008 bonds from A+ to AA- and offered this commentary:
“The affiliation has already achieved $13 million of annualized integration savings. Fitch Ratings believes the new system will improve the coordination of care and
utilization of resources in a competitive market.”
The Fitch report comes amid news of a large spike in net income at Beacon last year. Beacon finished 2012 with $182.25 million in net income, up from $16.68 million in 2011. Look here for an Elkhart Truth story from last week on that.
Here are a few other bullet points from the Fitch report (see the original here):
- Beacon maintained 59 percent market share in its service area in 2011, with St. Joseph’s Regional Medical Center in Mishawaka a “distant second” at 26 percent. Market share for Memorial Hospital by itself totaled 34 percent while the EGH number was 25 percent.
- Beacon has low debt burden, providing “some additional debt capacity … if strong cash flow is sustained.” Planned major capital plans include EGH’s $74 million proposal to build new surgical suites, a $46 million expansion of Memorial’s pediatric offerings and a $10 million upgrade of EGH’s information technology system.
- On the potential down side, Beacon gets around $60 million a year in supplemental Medicaid funding and that fund source “has been volatile in the past and has resulted in fluctuations in operating performance.” At the same time, the St. Joseph County economy is “challenged” by relatively high unemployment.
- The mix of revenue source in 2012 for patient care for Beacon included 44 percent from Medicare, 15 percent from Medicaid, 15 percent from Blue Cross, 18 percent from commercial entities and 7 percent directly from patients.
Beacon issued a press release last Thursday on the Fitch rating and the similar AA- rating from a recent Standard & Poor’s report. “This upgrade positions us well for the future, and stands as yet another important direct positive outcome from the affiliation,” Beacon Chief Financial Officer Jeff Costello said in the release.
Tim Vandenack is a reporter at the Elkhart Truth newspaper in Elkhart, Ind., www.etruth.com. He can be reached at firstname.lastname@example.org or 574-296-5884. Visit him/subscribe to him on Facebook or follow him on Twitter at @timvandenack.