Wellmont’s Wise Guardianship of Finances Results in Affirmation of BBB+ Rating from Fitch
KINGSPORT - Wellmont Health System's prudent stewardship of its finances during an unprecedented era in health care has earned the respect of a national rating agency.
Fitch Ratings recently affirmed Wellmont's BBB+ bond rating and classified its financial outlook as stable. The national firm, which thoroughly reviewed Wellmont's finances, concluded the health system is in solid shape, including having a strong balance sheet.
"This is excellent news and reflects the outstanding work by everyone at Wellmont to keep costs in line while still making appropriate investments to enhance patient care," said Denny DeNarvaez, Wellmont's president and CEO. "We are grateful to serve as the provider of choice in our region and are focused on meeting our patients' needs in the most cost-effective manner possible."
Fitch said Wellmont's liquidity continues to be strong, with unrestricted cash growing 6 percent in the first six months of the 2014 fiscal year compared to the year before. This figure has grown 49 percent from the end of the 2010 fiscal year.
Another impressive element of Wellmont's finances is its revenue minus expenses, excluding tax, interest, depreciation and amortization. Fitch said Wellmont's has averaged 11.5 percent for the past four audited years and was 9.9 percent for the first six months of this fiscal year. Wellmont has 213 days cash on hand compared to the median of 145 days for others with a BBB rating.
The firm complimented Wellmont for its implementation of the electronic health record through the Epic platform. This $100 million project enabled Wellmont to develop an innovative system that places all details of a patient's care at its facilities in one record.
Caregivers can securely access this information at any Wellmont location, empowering them to fully understand a patient's medical history and eliminate potential duplication of tests and services. Through Epic, the health system created MyWellmont, a secure portal that gives patients the opportunity to review a significant portion of their electronic medical record and interact in greater depth with their healthcare providers.
"For fiscal 2014, Wellmont budgeted for $13.5 million of implementation expenses that cannot be capitalized, with a portion of those expenses coming in the first half of the fiscal year," Fitch said in its report. "However, Wellmont did anticipate these expenses and is tracking ahead of budget for the first six months."
In its review, Fitch discussed Wellmont's ongoing evaluation of its strategic options for the future. Wellmont's board of directors and leadership team are working with Kaufman Hall & Associates Inc., which provides a full range of strategic and financial consulting services for health care, to determine the best direction for the not-for-profit organization.
"Wellmont is entering the process from a position of credit strength with a strong balance sheet, good market position and consistent levels of operation and debt service coverage," Fitch said in its report.
As Wellmont participates in this process, it continues to lead the region with high-quality care and key initiatives, particularly in the diagnosis and treatment of cancer. These include the installation of Trilogy at Holston Valley Medical Center and the planned acquisition of TrueBeam at Bristol Regional Medical Center.
These types of technology further advance the Wellmont Cancer Institute's ability to treat some of the most complex cancers in areas such as the head, neck, lung, prostate, liver and breast.
The cancer institute has also elevated its delivery of compassionate oncology care with the relocation of its facility in Johnson City and the opening of the Leonard Family Comprehensive Breast Center at Bristol Regional.
Many of these developments have occurred through partnerships with forward-thinking philanthropists in the community who have helped the cancer institute bring strength for today and hope for tomorrow to cancer patients.
In addition to cancer, Wellmont remains the standard bearer for cardiovascular care in the region with national and state recognition. The health system is also making improvements to other facilities, such as the expanded birthing unit and development of a wound care program at Lonesome Pine Hospital.
"We have faced significant financial challenges with the reduction in reimbursements from the federal government and the failure to expand TennCare and Medicaid in Virginia," DeNarvaez said. "Our co-workers have performed admirably by looking in every corner for savings. Through these efforts, we have demonstrated for third-party organizations which evaluate us that our value proposition is robust and beneficial to the region."