Fairview Receives Credit Downgrade Amid CEO Departure, Accretive Probe

Moody's Investors Services has downgraded the bond rating of Minneapolis-based Fairview Health Services from A2 to A3 due largely to the unexpected departure of CEO Mark Eustis and Fairview's "potential reputational risks" following the investigation of Accretive Health.

In May, Mr. Eustis announced he would be leaving at the end of July. Fairview and Accretive have undergone intense scrutiny as of late after state and federal officials alleged Accretive, a Chicago-based billing and debt collection agency, engaged in overly aggressive and illegal tactics to collect on patient bills. Accretive had worked onsite at Fairview facilities for two years, but the two organizations recently ended their agreement. Both Accretive and Fairview have denied any wrongdoing.

In addition to the bad name association with Accretive, Moody's analysts said Fairview experienced a tough financial year in 2011. Fairview's operating margin fell to 0.5 percent, days cash on hand fell from 123 in 2010 to 108 last year and other aspects of the balance sheet are "below average for a system of this size," according to the report.

The rating outlook was also revised to negative from stable. "The revision of the outlook to negative from stable reflects the downturn in financial performance in FY 2011, the lack of a permanent CEO for likely the next eight to 10 months and the uncertainties surrounding the investigation of the revenue cycle management company and the possible reputational risks for Fairview," according to the report.

More Articles on Fairview Health Services:

CEO Mark Eustis Leaves Fairview Health Amid Federal, State Criticism

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Minnesota AG Sues Hospital Debt Collection Agency for Patient Privacy Violations

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