Fitch Ratings has affirmed the ‘AA-‘ rating on $133,960,000 of series 2009A revenue bonds issued by the Delaware Health Facilities Authority on behalf of Bayhealth Medical Center.
The commentary regarding the ratings provides an insight into the economic impact of the second largest health care system in the state. Bayhealth also has $69,490,000 outstanding in series 2012 direct purchase bonds with PNC Bank that are not rated.
Fitch noted that Bayhealth has shown robust profitability producing solid cash flow has led to balance sheet strengthening over the last several years. Bayhealth is aided by an 80 percent market share in its operating area, which is primarily in Kent County, but extends to portions of Kent and New Castle.
Bayhealth has also undertaken a a multi-year expansion, with work completed at Kent General Hospital in Dover. A new Milford Memorial Hospital will be constructed in the third phase, beginning in 2015. Fitch says the project will cost $200 million over the next three years. Total revenue of Bayhealth for fiscal 2013 for Bayhealth is $476.3 million, with the health care system having a nearly equal amount of cash and investments.
Aiding the growth, according to Fitch, is an affiliation agreement with University of Pennsylvania’s Penn Cardiac Care, and enhanced oncology services through an affiliation agreement with the Penn Cancer Network.
Bayhealth posted operating margins of 8.5% in 2012 and 6.5% in 2013, above the median for comparable hospital systems, according to Fitch. Kent General Hospital is operating at capacity.
The financial strength led Fitch to not be concerned about the cost of the new Milford Hospital, which will serve an area with a growing population that includes a sizable number of senior citizens. Bayhealth has 3,100 employees and a medical staff of 466 physicians.
In fiscal 2013, Bayhealth recorded 90,142 emergency department visits, 18,078 patients admitted to beds, and 2,226 births.
