Redeemer Health in Meadowbrook received a two-notch credit downgrade from Fitch Ratings earlier this week, bringing it down from BB+ to BB-, writes Harold Brubaker for The Philadelphia Inquirer.
Fitch Ratings cited years of the nonprofit health system’s sizable operating losses that have eroded its reserves as the reason.
Redeemer’s unrestricted financial reserves were $115 million on March 31, compared to $220 million three years earlier. If the Catholic health system’s operating losses continue, its reserves will continue to decline, which will result in less financial flexibility.
“The agency noted industry-wide challenges such as staffing shortages, record-high labor costs, inadequate reimbursements, inflation, and investment market volatility as causes for the health system’s operating losses,” said Redeemer.
According to Fitch, efforts by Redeemer management to reduce operating losses in the year ending with June 30 “have been outstripped by persistently high expenses, elevated length of stay, and continued pressure in the senior-care division.”
Redeemer owns a 260-bed hospital in Meadowbrook, two nursing homes, and other senior-care facilities, as well as a hospital and home-care business that serves customers in Pennsylvania and New Jersey.
The health system reported a $34 million operating loss for the nine-month period ended March 31.
Read more about Redeemer Health in Meadowbrook in The Philadelphia Inquirer.
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