Drivers of the downgrade include BHS’ second year of weak operating performance. The system recorded a $13.4 million operating loss and an 8 percent operating cash-flow margin in fiscal year 2014.
Other negative aspects of the health system’s credit profile considered for the downgrade include its overall decline in inpatient volumes and higher-than-average reliance on Medicare and Medicaid, which make up a combined 72 percent of BHS’ gross revenue.
BHS’ strengths were also considered for the rating downgrade such as its good market share, unrestricted cash balances and plans to affiliate with Aa2-rated Baptist Health South Florida in Miami.
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