Moody's Investors Service has downgraded Thomas Jefferson University's debt rating by one notch, to A2 from A1, citing "execution risks" as the Center City instititution consolidates three health systems and another university.
The downgrade to what is still a strong rating also reflects "modest margins that will be challenging to sustain" and the need for increased capital spending to compete in a highly competitive market, Moody's said in a report Wednesday. The outlook is stable.
Standard & Poor's upgraded Jefferson by one notch last month. Jefferson's chief executive, Stephen K. Klasko, said Thursday that the two agencies' assessment of the health system were "not all that different."
It's natural that there are execution risks, Klasko said, noting, "It's been very rare for anyone to grow this quickly."
Jefferson merged with Abington Health in May 2015 and with Aria Health in last July, and it paid $67 million in June to gain a controlling stake in the Rothman Orthopedic Specialty Hospital. It has pending deals with Kennedy Health in South Jersey and Philadelphia University.