The Daily Pennsylvanian
Penn's Health System has received a financial shot in the arm from one of the nation's most prominent credit rating agencies.
The bond-debt rating for the Health System, which totals over $750 million, has been upgraded to A+ by Standard and Poor's.
The higher rating points to the security of an investment in the Health System, likely making investors more willing to shoulder a share of its debt in the hope of making a good return. The highest possible rating is AAA, and the lowest is D.
The rating is indicative of increased financial success and projected improvements for the Health System, which includes the Hospital of the University of Pennsylvania, the Presbyterian Medical Center and Pennsylvania Hospital.
Health System Chief Financial Officer Andrew DeVoe said that although the upgrade will not affect any short-term Health System policies, it represents progress that has been made in the last few years.
The improved rating reflects the Health System's long upswing since the 1990s, when the University considered selling it.
DeVoe said the higher rating may have long-term benefits because "higher-rated institutions can borrow money cheaper than lower-rated institutions."
Health System spokeswoman Rebecca Harmon said the financial success of the Health System will translate into better patient care.
Harmon added that any budgetary surplus is reinvested to improve facilities and quality of care.
The continued financial success of Penn's health network "is definitely a reflection of the dedication of the faculty and the staff to improve our financial position," Harmon said.
Standard and Poor's rates bond debts based on multiple factors, looking specifically at the income statement and balance sheet of the institution under review, future financial forecasts, competition and geographical location, according to Standard and Poor's credit analyst Martin Arrick.
He said the improved rating is a reflection of the quality and effectiveness of the Health System when compared to regional competitors.
"The Health System has done much better over an extended period of time" than its competition, he said.
Over the past several years, the volume of both in- and out-patients has increased, Arrick said, adding that the Health System has a very favorable capital outlook.
In fiscal year 2004, the Health System had operating revenues of approximately $50 million. Total revenues were $2 billion.
Clean bill of health - Standard and Poor's upgrades Penn Health System's debt rating to A+ - Officials believe that as a result, the Health System will be able to borrow money at a lower rate of interest - Rating judgments made based on current income, future forecasts and the degree of competition in a company's market - In fiscal year 2004, the Health System had total revenues of $2 billion
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