PeaceHealth suffers credit downgrade amid 'operational stress'

Vancouver, Wash.-based PeaceHealth was downgraded as the 10-hospital system continues to deal with "considerable operating stress," Fitch Ratings said March 21.

The downgrade from "AA-" to "A+" applies both to the system's default rating and to a series of bonds. The outlook is stable at the new rating, Fitch said.

While there is expected to be steady improvement in PeaceHealth's operating results over time, a difficult fiscal 2021 turned into further compressed margins in fiscal 2022 and such margins remain pressured into 2023. Average length-of-stay metrics remain of concern, Fitch added.

Management initiatives, particularly with regard to lowering contract labor costs, are slowly showing signs of small improvements operationally, with break-even margins since September. Management is targeting a return to profitability by fiscal 2026.

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