The rating affirmation was supported by a number of factors, including DCH’s recovering operating profitability. After four years of profitability decline, DCH posted a positive operating margin of 0.4 percent for the fiscal year ended June 30, 2014, up from -1.5 percent in 2013, according to Fitch. The improvement is attributed primarily to the Maryland Global Budget Revenue program by which DCH began receiving fixed hospital revenues beginning July 1, 2013.
DCH also faces some challenges, which were considered for the rating affirmation, such as weak liquidity and a high debt burden.
Fitch said DCH is expected to benefit from improved operational and financial stability under the Maryland Global Budget Revenue program, but a return to investment grade rating will depend on the demonstrated ability to build liquidity.
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