Grand View Health got a one-notch credit rating downgrade to BB- from Standard & Poor’s
Separately, Grand View reported a $9.5 million operating loss in the three months that ended Sept. 30.
Standard & Poor’s Ratings Service on Tuesday downgraded Grand View Health’s credit rating by one notch, to BB-, citing the Bucks County nonprofit’s bigger-than-expected losses despite sizable federal aid and worsening overall finances.
“While expectations had been for improving operations in recent years, operating losses have accelerated and been larger than anticipated” at Grand View during the last three fiscal years, S&P said in its report. “We believe the magnitude of these unbudgeted losses creates some risk.”
Over three years through June, Grand View’s operating losses totaled $115 million. Its total revenue during that period was $690 million. That translates to an operating margin of negative 17%.
In the quarter that ended Sept. 30, Grand View had an operating loss of $9.5 million, an improvement over a $17 million loss in the same period last year, but the improvement “does not fully offset the magnitude of recent and near-term operating losses,” S&P said.
Impact of new patient pavilion
Grand View built its new six-story patient pavilion, which opened to inpatients in June, as part of a plan to attract more higher-acuity patients, the organization’s CEO Doug Hughes said Wednesday during a presentation to municipal bond investors. That strategy is working, with increases in intensive care unit patients, Hughes said.
The $197 million pavilion will also help Grand View get more out of its relationship with Penn Medicine, which has 50 physicians at the Sellersville hospital, S&P said. The Penn affiliation includes providers offering specialized care in radiation oncology, orthopedics, radiology, trauma, and neurology.
In September 2021, Grand View received certification as a Level 2 trauma center, and so far this year has received 38 transfers of seriously injured patients from other hospitals, Hughes said. Grand View’s chief financial officer, Arthur Anderson, said on the investor call that the organization is still assessing whether the added trauma volume is profitable.