Financial Problems Facing Centegra

Lakewood bond analyst offers the following take on Centegra’s desired affiliation with Northwestern Memorial Healthcare (joint press release here.)

Centegra built a big new hospital in Huntley in order to stave off competition from Mercy Hospital.

Centegra's new hospital in Huntley from Reed Road.

Centegra’s new hospital in Huntley from Reed Road.

But building more beds doesn’t increase demand for medical services.

In fact, with a falling population, demand is decreasing.

Currently Centegra has 341 beds licensed.

It’s staffing 264, down from 308 in 2013.

Expect more cuts at the Woodstock hospital.

Centegra's Woodstock Hospital.In FY2011, Centegra had 63,000 acute patient days.

In calendar 2015, they had 48,400, down 23% in four years.

And this is BEFORE they open their new hospital.

Expect acute patient days to go up modestly but system-wide occupancy to drop sharply from the current 65% of staffed beds.

Centegra’s margins, cash ratios and debt service coverage — common metrics for assessing hospital creditworthiness — are all weak and about to get weaker when they have to staff the Huntley facility.

Of course they’re seeking to be acquired by a stronger hospital.

The same thing happened in Elgin.

Sherman Hospital's patient wing.

Sherman Hospital’s patient wing.

Sherman built that big, fancy, expensive new hospital, raising their costs.

But demand didn’t go up simply because they built a new hospital.

A year later they were desperately seeking a white knight to buy them.

[Advocate Health System acquired Sherman.]

We’re probably looking at the end of an independent hospital in McHenry County.

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Comments

Financial Problems Facing Centegra — 19 Comments

  1. Obama care was written to become a single payer system within ten years. It is well on track.

  2. “We’re probably looking at the end of an independent hospital in McHenry County.”

    Again…..

    WHO CARES?

    Centegra is horrible and Northwestern is as good as it gets!

  3. Despite the PR barrage did anyone actually think that the new Centegra facility in Huntley was viable?

    The Sherman state of the art facility, less than 10 minutes from Huntley, went bankrupt.

    How could regulators or even Centegra senior management fantasize the success of Huntley?

  4. Eesley sank the whole thing without an iceberg other than his own mistakes and massive salaries.

  5. “Build it and they will come” they said.

    Maybe they should build it on Randall road.

    Then people will come in herds… right?

  6. The ripple effects of corruption at work.

    Remember, the Mercy Hospital deal?

    The plan was denied initially, because McHenry County did not, at the time, have the population to support a new Hospital.

    Though, it was later approved because of a bribe.

    The case goes back to the days of Tony Rezko who now sits in Federal Prison.

    After the deal was approved, the individuals were caught on a Federal wire and the deal was quashed again.

    Imagine that, Rod Blagojevich and Tony Rezko had ties to McHenry County. The long arm of corruption in Illinois, reaches far and wide.

    If the people want reform and change in Government, they need to be involved and at the polls on election day.

    It is we the people, who now face the consequences for really bad choices made by government officials.

    Every single person, has the power to make a difference reforming government.

  7. On the bright side…it means less people are sick and in a hospital!

  8. I want a Northwestern hospital.

    I don’t want a Centegra hospital.

    How is this not a good thing?

    Is this just a McHenry County Pride thing?

  9. Dear 815Voter:

    I don’t believe anyone is saying it’s not a good thing.

  10. I agree with Cindy!

    Plus, hospitals should be saving money by not treating patients not loosing money by not having enough patients to suck dry.

    Hospitals should be not profiting from us.

    Its part of the problem with the entire healthcare system and it is probably why patient numbers are down.

    Nobody can afford treatment so they wait it out.

  11. I always thought they should take the Woodstock facility and turn it into a long term/senior care facility.

    I brought that up with a Centegra exec once when they were trying to get approval for the Huntley facility and he took my head off, asking where I had heard that.

    It was just speculation on my part, but those people are awfully thin-skinned.

    Makes me wonder if that was a plan that fell through.

  12. Seems to me that all hospitals are being bought out to create larger market shares and bigger health care providing companies.

  13. This will not turn Centegra into Northwestern, neither will it bring Northwestern closer to McHenry.

    Anybody who knows anything about Centegra knows that their finances are not strong.

    There have been rumors as well that they have been using funds from the Huntley hospital bonds to fund operations (and to pay their own rather generous salaries).

    Credit card bills always come due.

    Time to sell themselves, to any willing buyer.

    This was entirely foreseeable.

    Not much will be lost.

    Centegra ceased to be a community hospital long ago.

    It is just another poorly enterprise with a golden parachute for its executive.

  14. huntley was built to take pressure off of centegra mchenry.

    that place needs lots of love…

    woodstock will eventually not serve as an inpatient facility, but rather long term nursing care + outpatient services

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