Fountain Valley-based MemorialCare Health System’s solid debt ratings were affirmed this month by New York City-based Fitch Ratings Inc.
MemorialCare owns Orange Coast Memorial Medical Center, also in Fountain Valley, and Saddleback Memorial Medical Center, which has locations in Laguna Hills and San Clemente.
Fitch affirmed MemorialCare’s AA- long-term and F1+ short-term ratings. An AA rating indicates “very high credit quality.” The F1+ rating for short-term is Fitch’s “best quality grade” and indicates an “exceptionally strong capacity” of the rated entity to meet its financial commitments.
The ratings agency said in a news release that various drivers supported its AA- rating for MemorialCare.
“MemorialCare’s overall financial profile is solid for its rating level with strong liquidity, good profitability and moderate debt burden,” Fitch said.
Fitch mentioned that the health system had $1.44 billion in unrestricted cash and investments as of Dec. 31.
It noted that MemorialCare’s profitability has been “aided by the net benefit of the state provider fee.”
The agency said the funds give MemorialCare more flexibility to invest in strategic initiatives, such as buying doctors’ groups, opening ambulatory care centers, and the 2013 creation of Seaside Health Plan.
Another driver: the health system’s “excellent management practices,” according to Fitch.
“[We believe] the organization has conservative budgeting and financial planning, which does not rely on the state provider fee funds,” Fitch said.
Fitch also mentioned how MemorialCare has handled growth and integration.
“MemorialCare has invested heavily [in] strategic physician acquisitions, building its electronic medical record, growing its ambulatory network and adding additional capabilities including owning a health plan,” the agency said.
Fitch praised MemorialCare’s managing wellness of its own employees and its plans to extend wellness services to other businesses in its service area.
The agency also touched on MemorialCare’s “densely populated” service areas of Orange and south Los Angeles counties.
“Overall, the organization continues to experience softening inpatient volume and lower elective procedures while outpatient volume and emergency room volume increase,” Fitch said.
The report also mentioned Irvine-based St. Joseph Hoag Health, an integrated delivery network created in 2012 by St. Joseph Health, also based in Irvine, and Newport Beach-based Hoag Memorial Hospital Presbyterian.
“To date, there has not been any major market shifts due to the consolidation activity and Fitch will continue to monitor market developments,” the agency said, adding that it would view favorably MemorialCare’s planned transition of Saddleback’s San Clemente campus from an acute-care hospital to an ambulatory center, a possible move that has been decried by some doctors and community members.
Hospital Gets Interim CEO
Santa Ana-based Integrated Healthcare Holdings Inc. said Don Kreitz is serving as interim chief executive of Coastal Communities Hospital, also in Santa Ana.
Kreitz is also chief executive of Chapman Medical Center in Orange, one of Integrated’s four OC-area hospitals. He will oversee both facilities and replaces Luke Tharasri at Coastal Communities.
Coastal Communities has 178 licensed beds. It ranks No. 20 on the Business Journal’s most recent list of the largest hospitals in the county, with net patient revenue of $53.1 million and a pretax net loss of $2.9 million in the 12 months ended in September.
Integrated, which is traded on the low-profile Pink Sheets exchange, owns Western Medical Center-Santa Ana and Western Medical Center-Anaheim, as well as Coastal Communities and Chapman Medical Center. It was created after Dallas-based Tenet Healthcare Corp. sold the four hospitals in 2004.
Bits & Pieces
Irvine-based Praxsyn Corp. said its subsidiary, Mesa Pharmacy, received $4 million in approved preferred provider organization claims in February. Praxsyn, through Mesa, provides non-narcotic topical pain medications to industrial health doctors and medical clinics. … Dr. Dan Cooper, chairman of UC Irvine Health’s pediatrics department, was named 2015 Pediatrician of the Year by the American Academy of Pediatrics’ Orange County chapter. He serves as director of UCI’s Institute for Clinical & Translational Science.
