Moody’s: Aspen Valley Hospital has stable financial outlook

Rick Carroll
The Aspen Times
Aspen Times file photo
Jeremy Wallace/The Aspen Times |

One of the big three credit-rating agencies earlier this month gave Aspen Valley Hospital’s financial picture a stable outlook.

Moody’s Investors Services reaffirmed the medical facility’s Baa2 revenue bond rating, which “reflects our expectation of continued strong financial performance and favorable liquidity levels as the hospital continues to complete its master facilities plan and exhibits strong fundraising capabilities,” the firm said in an Aug. 5 statement.

“A stable outlook is a really good thing, with critical-access hospitals going in and out of business,” said Dan Bonk, CEO of Aspen Valley Hospital. Bonk said the rating is the highest a critical-access hospital can obtain.

In order to be a critical-access hospital, the federal government requires it to have no more than 25 inpatient beds, be at least 35 miles away from another hospital and offer around-the-clock emergency care, among other offerings. The designation entitles such hospitals to extra reimbursement from Medicare.

Aspen Valley Hospital, which has 25 inpatient beds, currently is in its third phase of a major construction project. Phase 3, which includes construction of a new emergency department, a surgery center, operating rooms, an outpatient diagnostic room and medical offices, is scheduled for completion in November 2017. The phase costs $60 million, of which $33 million has been secured through donations raised by the Aspen Valley Hospital Foundation, Bonk said.

“If we can raise a significant part of that before March, we can continue the project without stopping it,” he said.

The bond rating by Moody’s, Bonk said, was driven by several factors, including the seasonality of the hospital’s business and the fact that its board members are elected by the public.

“Our risk factors are the seasonality of our business,” he said. “If it doesn’t snow here, it’s not going to be good for the hospital. And having an elected board of directors makes someone like Moody’s cautious rather than having a long-term, self-perpetuating board.”

Moody’s noted that the bond rating is supported by the hospital’s “continued strong financial performance, which has averaged an operating cash flow margin of 17.2 percent over the last five years, aided by the hospital’s critical access designation and favorable payor compensation.”

Bonk noted that Aspen Valley Hospital continues to trend toward becoming more of an outpatient facility. Last year, outpatients accounted for 74 percent of the hospital’s revenue, according to hospital records.

Through May, the hospital had a total operating revenue of $35.6 million, which was 3.6 percent over budget. Also for the first five months of the year, the hospital had an operating margin of $4.1 million.


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