Temple University Health System’s financial turnaround, despite COVID-19, gets a big upgrade from Fitch Ratings
As a sign of its continued financial improvement, the Temple University Health System received a two-notch upgrade to investment grade status on Wednesday after spending the past eight years in junk-bond territory.
Fitch Ratings cited an influx of $ 305 million in cash from the sale of Temple’s 50% stake in Health Partners Plans Inc. and two years of improving the profitability of the country’s safety net system. north of Philadelphia. Its anchor point, the 576-bed Temple University Hospital, is in fact the city’s public hospital.
The new rating – âBBBâ, up from âBB +â – means Temple is likely to face lower borrowing costs in the future.
With its increased financial strength, Temple, which posted operating income of $ 95 million on sales of $ 2.4 billion in its most recent fiscal year, has planned major projects, has said Fitch.
Temple previously announced the conversion of the former Cancer Treatment Centers of America hospital building in the Juniata Park section of Philadelphia to a specialist hospital for women at a total cost of approximately $ 42 million, including the $ 12 million. of dollars he paid for the property in June.
âThe ability to move obstetrics to the Juniata Park campus will solve perennial capacity issuesâ at Temple University Hospital, allowing more of the sickest patients to be treated, said Fitch.
Fitch said Temple also plans to spend $ 70 million on an outpatient building near the main hospital and $ 50 million on an upgrade to the Fox Chase Cancer Center. These projects are scheduled for 2023 to 2025. Temple did not provide any additional information on the destination of the new building.
Many of Temple’s patients at its Anchor Hospital have Medicaid insurance, which pays significantly less than employer-sponsored plans that are more common with most of Temple’s competitors. Temple is therefore receiving special support from the Pennsylvania government, totaling $ 222 million for the fiscal year ended June 30, 2021 and $ 213 million for fiscal 2020, Fitch said.
Temple’s healthcare system employs nearly 10,000 full-time equivalent people.
Even before incorporating the $ 305 million from the sale of Health Partners Plans, a nonprofit Medicaid and Medicare insurer, to Thomas Jefferson University on November 1, Temple’s financial situation had steadily improved in as part of a turnaround effort that began in 2018.
The sale of Fox Chase and Jeanes was under consideration. Jefferson agreed to buy Fox Chase, but withdrew from the deal due to the pandemic’s drag on the finances of most healthcare systems.
Temple had a heavy load of COVID-19 patients, but benefited from its ability to isolate them during the peak of the pandemic in a building separate from the main hospital. Unlike many healthcare systems, Temple remained profitable during the pandemic.
Mike Young, who started at Temple as Chief Operating Officer of Temple University Hospital in August 2018, assumed overall system leadership in February 2020. Young has focused on obtaining all of the system facilities including Episcopal, Jeanes and Fox Chase. to work together in a more transparent way, focusing on what is best for the system as a whole rather than for individual components.
For example, the main hospital, Jeanes and Episcopal each had their own laboratories for blood work and other tests. There is now a larger lab at the main hospital where a robotic line can perform tests more efficiently, Young said in an interview in September 2020.