Moody's also noted that Premier closed down its health insurance division. Premier shut the insurance plan down after big losses and a dropped attempt to sell the division.
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Premier stated that with closing Good Samaritan, shutting down its insurance division and contract issues with UHC, the health network made decisions to stay strong into the future and said it significantly improved operating performance during the final quarter of 2018, which should continue in 2019.
“A key focus of Premier Health’s strategic plan has been to expand access to care across our geographic footprint, and early indications suggest that this effort should help drive long-term financial sustainability to support our mission of building healthier communities,” Mary Boosalis, president and CEO of Premier Health, said in a statement.
Premier said in a statement that the rating was “not unexpected given the circumstances of that time period locally, as well as broader industry trends that have had a negative impact across the nonprofit health care sector.”
Premier went back in-network with UnitedHealthcare at the beginning of 2018, and said it has kept almost all of its UHC customers.
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Good Samaritan had about 1,600 employees at its main campus and closed in July. As part of the closure Premier had a voluntary retirement program and made job offers to all employees to move to other sites, and Premier said there were costs associated with both of those processes.
The Moody's report also said that Premier has a strong competitor that has taken market share, which heightens Premier's risk. The Dayton Daily News previously reported Kettering Health Network, Premier's chief competitor, has been rapidly expanding its footprint, including new locations nearby existing Premier sites such as a Troy hospital under construction near Upper Valley Medical Center and a newly opened ER and medical center in Middletown close to Atrium Medical Center.
Typically, lower rated bonds have to pay a higher interest rate. That means this move could cost Premier more money the next time it seeks to issue bonds.