Medical Center Health System CFO attributes hospital district's bond downgrade to Cerner issues

Leadership at Odessa, Texas-based Ector Hospital District, which does business as the Medical Center Health System, attributed a recent bond downgrade to costs associated with its EMR implementation, the Odessa American reports.

Here are five things to know about the hospital district's bond downgrade.

1. Fitch Ratings recently downgraded Ector Hospital District's issuer default rating to "BB+" from "BBB," attributing the downgrade to several factors, including the health system's low operating margins and high capital needs assessment, as well as its weak leverage position and weaker liquidity metrics.

2. In 2016, the Ector Hospital District's bond rating was "A-." In 2017, the district was downgraded from "A-" to "BBB." Former Medical Center Health System CFO Jon Riggs attributed the 2017 downgrade to the district implementing a Cerner EMR system, which went live in April 2017 and cost about $55 million.

3. The health system's current CFO, Robert Abernethy, said the recent downgrades are reflective of various factors, including growing operating losses. He also tied the downgrades since 2016 to the Cerner implementation, saying it "really hurt us from an Accounts Receivable standpoint."

4. During a Feb. 13 meeting with the Ector County Hospital District board of directors, Medical Center Health System President and CEO Rick Napper acknowledged the initial EMR rollout included issues with system stabilization, revenue cycle management and reporting. However, he expects the total cost of the project to come in at only $47 million of the $55 million budgeted.

5. Mr. Abernethy said the hospital district's goal is to get into the high "BBB" or "A-" rating range.

"I think this downgrade was not that unexpected, but I was pleased that it went only to a 'BB+,'" he said. "I think it reflects not only do we have a lot of room for improvement, but it also reflects the optimism that we're going in the right direction."

Alia Paavola contributed to this report.

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