ST. PETERSBURG — After a year of major changes that have resulted in a 10 percent increase in patients at All Children's Hospital, a leading credit rating group has given the institution a clean bill of financial health.
Fitch Ratings on Wednesday affirmed All Children's AA bond rating, pointing to its strong cash flow, successful transition to a new building, increased patient volume, and an affiliation with Johns Hopkins Health System as key drivers behind the rating.
Fitch noted that the hospital's operating margin, which dropped to 1 percent in the 2009-10 fiscal year because of the construction project, rose to 5.6 percent in the first half of the current fiscal year.
"We're very happy," said Nancy Templin, All Children's chief financial officer. "It shows we were able to open a hospital successfully, and that our volume and financial activity have been better than expected.
"It lets the public know that we've done what we said we would do."
In January 2010, All Children's opened a 259-bed hospital and adjacent 250,000-square-foot outpatient center. The new facilities, which also included a power plant and parking garage, cost $390 million and were funded by $200 million in debt, $115 million in cash and $75 million from the All Children's foundation, according to Fitch.
Fitch noted that hospital cash flow remains strong. As of March 31, the hospital had unrestricted cash and investments totaling $291 million.
The rating report, however, cited the hospital's high reliance on government funding and above-average debt burden as concerns that could negatively affect its bond rating in the future.
All Children's receives more than 60 percent of its revenue from Medicaid, the government insurance program for the poor. That makes it particularly vulnerable to cuts in government funding. But Fitch noted that the high reliance on Medicaid is typical of children's hospitals.
Richard Martin can be reached at [email protected] or (813) 226-3322.