Moody’s has placed Portland, Ore.-based Legacy Health’s “A1” long-term ratings under review for downgrade following the termination of its proposed merger with Oregon Health & Science University.
The ratings agency said in a May 8 report that its review will focus on Legacy’s “path forward as it repositions itself to remain an independent organization.” Moody’s said the eight-hospital system’s current challenges include three years of weak operating margins “driven by a high cost structure and unfavorable state regulation.”
Next steps for the system include hiring new permanent management, including a CEO and CFO, according to the report.
Legacy and OHSU Health — also based in Portland — mutually agreed to terminate their planned merger on May 5.
The systems said after “consideration of the evolving operating environment,” they determined the best way to meet the communities they serve is to “move forward as individual organizations.” Neither system provided additional details on the reasoning behind their decision.