Sunday, December 8, 2013
AUGUSTA — Moody’s Investors Service has downgraded MaineGeneral Medical Center’s credit rating, citing a downturn in the company’s financial performance last year and a negative outlook for the year to come.
Moody’s changed the rating for the $281 million in bonds that MaineGeneral sold in 2011 to Ba1, the highest in a tier of ratings applied to bonds sometimes called “junk bonds” because they are more likely to go into default.
The previous rating was Baa3, considered investment grade.
MaineGeneral’s cash flow decreased from fiscal year 2012 to fiscal year 2013 because of cuts to Medicare and Medicaid and lower inpatient volumes.
The hospital also has a heavy debt burden, according to Moody’s, and the aging population of central Maine will increase the hospital’s exposure to Medicare.
Moody’s identified some strengths of MaineGeneral, including the completion of the system’s new north Augusta hospital ahead of schedule and on budget and the $48 million in Medicaid back payments the hospital recently received from the state.
Moody’s said the credit rating is unlikely to improve in the near future because the costs of transitioning to the new hospital will raise expenses. MaineGeneral’s management anticipates an operating loss and lower cash flow in fiscal year 2014, according to Moody’s.