Fitch Ratings, one of the premier bond rating agencies in the United States, has affirmed a “BBB+” rating on the approximately $90.8 million series 2012 bonds issued by the Nassau County Local Economic Assistance Corporation on behalf of South Nassau Communities Hospital in Oceanside, it was announced this week by Mark Bogen, the hospital’s senior vice president and chief financial officer.
The money will not be used for a specific capital project, but for “supporting the daily operations of the hospital,” according to Damian Becker, a spokesman for the 435-bed facility.
“Any time an organization wants to sell public debt, it is required to get a rating from one of three rating organizations — Standard & Poors, Fitch or Moody’s — Bogen explained. “That rating ensures the public about the overall condition of the organization seeking to sell the debt.”
Bogen said that Moody’s gave the hospital a A3 rating, which is slightly less advantageous than Fitch’s BBB+.
He credits the hospital’s performance over the past year with earning the hospital and increased rating.
After a decline in 2011 and 2012, for the six-month period ending in June of 2013, the hospital produced improved operating results due to lower pension expense, cost-cutting initiatives and increases in some more highly reimbursed outpatient procedures, Bogen said. He added that the hospital’s increased market share is partially due to the closures of two nearby hospitals — Peninsula Hospital Center in Rockaway and Long Beach Medical Center, which was devastated by Hurricane Sand and remains closed a year later.
A better rating has positive impacts on the hospital, Bogen said.
“It has an intrinsic value of showing the strength of the hospital in a business sense,” Bogen said. “It shows that management is doing a good job.”
“It also helps insure interest rates, which allows you to borrow money for other projects,” he added. “It also impacts the valuation of existing bonds and helps to induce people to invest in the hospital.”
In fact, Bogen pointed out, when they introduced the bond issue in October of 2012, it was almost immediately oversubscribed by a 5 to 1 ratio.