To finance its new hospital in Huntley and renovate other facilities, Centegra Health Systems is getting ready to borrow $134,715,000 through the Illinois Finance Authority.
As is customary when large bond issues are proposed, financial rating services off opinions.
Fitch has the following comments to make, among others:
- Fitch Rates Centegra Health System & Affiliates, IL Ser 2014A Revs ‘BBB’; Downgrades Rev Bonds (headline)
- Fitch Ratings-Chicago-05 May 2014: Fitch Ratings has assigned a ‘BBB’ rating to approximately $134.7 million series 2014A revenue bonds expected to be issued by the Illinois Finance Authority on behalf of Centegra Health System and Affiliates (Centegra).
- In addition, Fitch downgrades the following revenue bonds to ‘BBB’ from ‘A-‘: –$195.0 million Illinois Finance Authority (Centegra Health System and Affiliates), series 2012
- The Rating Outlook has been revised to Stable from Negative.
Key rating dirvers are listed:
- Elevated debt burden
- Modest profitability…Operating margins of 0.2% in fiscal 2013 and 0.5% through the nine months ended March 31, 2014 are light compared to the ‘BBB’ category median of 1.8%.
- Leading market position, competitive service area…Centegra controls about 43.3% inpatient market share
- Strategic investment strategy…Fitch views Centegra’s proactive and strategic initiatives as a credit positive and will likely prove integral to the success of the new hospital.
Stuart Levine, one of Blago’s buddies, went to jail because of how crooked the system for licensing hospitals is in Illinois.
Mercy (of Wisconsin) wanted to build a hospital here in McHenry County, and Centegra fought them tooth and nail to keep them out.
Now Centegra is building a huge new hospital so they can “prove” there is no need for Mercy to build a hospital.
The problem is, $135 million is a lot of money (almost enough to fix three and half miles of Randall Road — but that’s another issue).
So Centegra’s costs are going to go up, while revenue won’t increase by one thin dime; more people don’t get sick or injured just because they build a new hospital.
Centegra should look at Sherman Hospital in Elgin.
Sherman built a big, shiny new hospital, and in six months they were desperately looking for a white knight to bail them out — Advocate, as it turns out, which took them over but didn’t assume responsibility for Sherman’s debts.
I predict that within two years of the new hospital opening, Centegra will be hurting so much because of their higher fixed costs that despite their government-enforced monopoly on hospital care in McHenry County, they, too, will be looking for a bigger health care system to buy them out.
Standard & Poor’s cut Centegra’s rating, too, to just two notches above the “junk bond” level.
Since Paul Laudick left, Centegra has been run into the ground.
The employees past and present tell the story.
Massive salaries and bonuses at the top while services cut to ribbons.
Qualified nurses and support staff can’t leave fast enough; of course many are fired or have their hours cut…
All the while the people at the top are laughing all the way to the bank… in the Caymans.
Ever hear of a hospital without a gift shop?
Yes, in 2 years Centegra will look to be taken over.
Meanwhile, each month that goes by, it is another quarter million dollars for Mr Eesley.
Not bad, eh?