Aspen Valley Hospital refinances general obligation bonds, Moody’s gives it ‘stable outlook’
The number-crunchers at Aspen Valley Hospital face some key financial decisions for the rest of 2020 because of the coronavirus pandemic’s impact on the public facility’s bottom line.
Among them will be deciding whether to seek forgiveness for a Paycheck Protection Program loan of $8.2 million AVH received in May. The hospital finished spending all of that money July 21.
“We have some time to make that decision,” hospital CEO David Ressler told The Aspen Times last week. “We need to know by December … but we don’t know what the rest of the year holds, and with the virus increasing there is the potential for us to have to curtail services.”
Other fiscal decisions have been more clear cut, like the hospital’s board of directors accepting Chief Financial Officer Ginette Sebenaler’s recommendation to refinance general obligation bonds district voters approved in 2010. The $50 million in bonds were used to help fund the expansion and renovation of AVH.
At the hospital’s board meeting July 13, Sebenaler said the interest rate will not exceed 4% and the principal amount will not exceed $33 million under the refinancing. AVH will realize $4.5 million in annual savings starting in 2021 through the refinancing, according to Sebenaler.
“This really keeps with faith with our commitment to the community to minimize burdens on the taxpayers who have supported the hospital and I support this initiative 100%,” said board director David Eisenstat.
On July 17, ratings agency Moody’s Investors Service gave AVH an Aa2 rating after the refinancing deal was brokered.
Moody’s also gave AVH’s financial picture a “stable outlook.”
“The stable outlook reflects our expectation that the hospital district’s financial profile will remain healthy and in line with medians despite the contraction in cash flow and operating margins seen in the first half of 2020,” Moody’s said in a statement. “The hospital has taken measures to preserve cash and liquidity through its robust philanthropy efforts, governmental protection and expenditure reductions.”
Moody’s also said, “The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices and financial market declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. … We do not see any material immediate credit risks for Aspen Valley Hospital District given the financial assistance recently provided by the federal government, a strong philanthropic history and a supportive electorate.”
AVH’s financial situation has been fluid by both spiraling and showing signs of a rebound since the global pandemic was declared in mid-March.
“We received the PPP funds because we didn’t know what was coming back then, and we still don’t know,” Ressler said.
AVH used 96% of the PPP money to cover payroll costs, including $6 million to pay wages and salaries, $1.1 million on employee pension plans, and $848,000 toward heath insurance premiums, according to Sebenaler. The remaining $324,000 went toward rent and utilities.
Suspending certain services was a major reason AVH and other hospitals across the country saw their revenue squeezed because of the pandemic. AVH had to shelf its elective medical procedures and surgeries for six weeks starting March 16 as part of sweeping measures taken to limit the spread of the novel coronavirus.
The suspended services slowed AVH’s momentum from January and February, which combined to generate patient revenue of $30.5 million, of which nearly $24 million was derived from out-patients and $6.5 million from in-patients.
Through May, AVH had produced $52 million in patient revenue, nearly 25% short of the $69.3 million projected for the year’s first five months.
The public hospital was down 16% in projected patient revenue through May of this year, all of its departments sliding in income except for baby deliveries, where revenue was up 15.6%, according to AVH executives.
Earlier projections for 2020 are likely to slip the rest of the year, yet the deepest cuts are hopefully behind, Sebenaler and Ressler said.
July and August are projected to fall short of budget by 70%, while September and October are expected to hold at 90%. The hospital also has a hiring freeze intact.
The hospital also has received a $7 million grant through the CARES (Coronavirus Aid, Relief, and Economic Security) Act, as well as $12 million in Medicare advanced payments that it must reimburse.
Support Local Journalism
Support Local Journalism
Readers around Aspen and Snowmass Village make the Aspen Times’ work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.
Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.
Each donation will be used exclusively for the development and creation of increased news coverage.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User
Firefighting officials are on high alert in the Roaring Fork Valley as the dry weather continues, and Friday afternoon a wildland fire started by a lightning strike near Old Snowmass sent firefighters scrambling to the area on the ground and from the air.