CHI will also use the money to invest in health insurance plans, clinically integrated networks and other risk-based initiatives. The $1.7 billion will significantly grow CHI’s debt burden, and credit rating agencies have noticed. Earlier this month, Standard & Poor’s Ratings Services downgraded CHI from “AA-” to “A+” due to the increased debt plans and weaker operating metrics.
Dean Swindle, CFO of CHI, said the debt burden will create some short-term challenges for the system, which has 87 hospitals and more than $12 billion in annual operating revenue. However, he said the plans will “pay dividends down the road” because it is a “vital investment” in CHI’s future.
“CHI’s bold plans are by definition going to create some risk — there is always inherent risk in strategic investment,” Mr. Swindle said in a news release. “But not doing this will create far more risk.”
More Articles on Hospital Finance:
Tenet Closes on $4.3B Vanguard Acquisition
Fitch Upgrades HCA’s Debt After Strong First Half of 2013
Report: Restrictions on Tax-Exempt Bonds Would Damage Hospitals, Economy
