Fitch Ratings kept a BBB- rating on $37 million in bonds issued on behalf of Beebe Medical Center , Lewes, by the Delaware Health Facilities Authority.
The ratings outlook was raised from negative to stable, due to the settlement of the case involving former pediatrician Earl Bradley. Beebe and others reached a settlement in lawsuits regarding sexual abuse of children by Bradley.
Beebe was required to pay $14.7 million, plus $100,000 per year for five years and will provide $1 million of free medical services to the victims. The remaining portion of the $122.2 million settlement was covered by Beebe’s insurers.
The rating was not raised because of what Fitch termed as weaker operating results. Beebe reported a $3.2 million operating loss, due to costs of the new electronic records platform and higher losses from the employed physician group.
The electronic records program led to a decision to scrap its current information technology system, which was not believed to be robust enough for the records system.
The new system will cost $37 million over seven years.
All hospitals in Delaware are part of the electronic records program that aims to improve the quality of care.
The physicians network, which employs 41 physicians, had an operating loss of $10.4 million in fiscal 2012 and management expects the loss to be $12 million in fiscal 2013 based on the growth of the group.
At the same time, Beebe has returned to profitability in fiscal 2013, with an operating profit of $2.5 million through the third quarter of the fiscal year that ended on June 30. That amounted to 1.2 % operating margin.
Beebe does have cash and investments totaling $70.6 million and no longer has to provide collateral on $18.5 million in debt issued by PNC Financial.
Aiding Beebe is a debt load that is lighter than the average for medical centers in the BBB category at 1.9% of revenues.
The coastal Delaware health system also maintains a good market position in its area, Fitch stated. Beebe is also opening satellite locations in Sussex as competition intensifies.
Beebe Medical Center is a 210 licensed-bed acute hospital in Lewes, Delaware with $280.4 million of operating revenues in 2012.
