Fitch is bullish on Trinity’s future. The ratings agency reaffirmed Trinity’s ‘AA-‘ rating as one of the largest rated multi-state systems. Trinity has scaled its operations across regional health ministries to diversify its enterprise and disperse risk, according to the report.
Six things to know:
1. Fitch expects Trinity will keep improving its operating EBITDA margins in the coming years after solid improvement in the 2024 fiscal year, ending June 30. Operating EBITDA margin grew from -1.5% in the 2023 fiscal year to 5%. Fitch expects Trinity’s long-term operating EBITDA margins to reach 8% to 8.5%, as its TogetherTeam care model is fully implemented.
2. TogetherTeam, a care model leveraging bedside nurses, virtual nurses and care partners, was installed for 24 hospitals in 11 states when the report was developed, and Trinity plans to roll it out to the entire system in the next three years. “Even beyond the expected success of TogetherTeam, Trinity Health has additional revenue enhancement and expense alignment initiatives planned, including developing clinical applications using artificial intelligence,” the report notes.
3. The health system was able to make operational improvements, reduce reliance on contract labor and decrease per hour costs for contract labor unit, according to the report. Trinity also reported a positive net new hire ratio and reduced staff turnover.
4. Trinity improved its unrestricted cash and investments to $14.7 billion from $10 billion in the previous year and increased days cash on hand from 173.7 to 234 days after terminating a joint operating agreement with BayCare in Florida. The system received $4 billion cash proceeds from the move.
5. In the last fiscal year, Trinity reported Medicaid and self-pay patients combined for 19.2% of the system’s gross revenue, relatively low compared to other systems. Trinity’s key states of Ohio, Michigan, Iowa, Illinois and New York comprised 63.8% of the operating revenue, further strengthening its business.
6. Inpatient and outpatient services each accounted for 36% of the health system’s revenue. A large portion of the remaining revenue was attributable to physician services and premium service lines.
“In addition to labor initiatives, a significant amount of energy was also devoted to revenue optimization in such things as improved collections, payer negotiations and reduced denials and write-offs,” Fitch’s report notes. “All encouraging signs that operational stability and success are achievable, with similar targets identified for fiscal 2025 in the continued areas of revenue optimization, labor stabilization and alignment of administrative and support services.”
