Citing "an unexpected operating loss" in fiscal 2007 and the first quarter of 2008 and "persistently weak liquidity," Standard & Poor's has lowered its rating on bonds issued to Crozer-Chester Medical Center. It said the outlook is stable.
The rating on Delaware County Authority, Pa. bonds dropped to BBB- from BBB. Standard & Poor's also lowered the rating on 2002 bonds the authority issued to Crozer to AA+/A-1+ from AAA/A-1+.
The lowered rating affects about $179 million in debt.
In a press release, Standard & Poor's said Crozer-Chester has a strong market position in Delaware County and has had an orderly management transition, with a new CEO, CFO and three other senior management team members beginning work since 2006.
On the downside, Crozer-Chester's parent, Crozer-Keystone Health System, had an unexpectedly bad year in fiscal 2007, with losses accelerating in early 2008. The credit rating company said hospital management blamed the "sub-par performance" on a rapid drop in patient length of stay and inability to reduce staffing levels quickly. The hospital also said it had more bad debt, higher employee health coverage costs and "softness in some outpatient measures."
A spokeswoman for the hospital did not immediately return a phone call.