Wellmont Retains BBB+ Bond Rating from S&P, Showing Strength of Organization to Adapt to Change
June 20, 2017 | Kingsport, Tenn.
Reinforcing the strength of Wellmont Health System’s commitment to provide high-quality care at the lowest possible cost, a prominent national agency has reaffirmed the organization’s bond rating.
Standard & Poors Global Ratings has again assigned Wellmont’s long-term and underlying ratings as BBB+ and concluded the health system has a stable financial outlook. The New York-based company completed its evaluation after meeting with Wellmont leaders to review the organization’s prior and current performance and examine where the health system is headed.
“The ratings reflect our view of Wellmont's improved operating and financial metrics in fiscal 2016 and solid improvement during the first nine months of fiscal 2017, relative to the same period a year earlier,” S&P said in its report. “The ratings also reflect the system's solid market share in its seven-county primary service area.”
Specifically, S&P noted the $11.7 million operating income Wellmont achieved in the fiscal year that ended June 30, 2016, which was double the amount it had earned in the prior fiscal year. Plus, in the first nine months of the fiscal year that will end June 30, 2017, Wellmont has realized $11.2 million in operating income.
The company also highlighted Wellmont has 218 days’ cash on hand and said the organization has established a solid business position, with a good market share in a demographically favorable region.
“Further supporting the ratings are Wellmont’s multiple operating and strategic initiatives that we expect will help the system generate stronger operating results,” S&P said. “In addition, we believe Wellmont’s balance sheet will remain robust because the system has very modest capital spending plans for fiscal years 2017 and 2018.”
Bart Hove, Wellmont’s president and CEO, said the S&P results demonstrate the health system’s desire to seek innovative ways to improve people’s lives within the changing health care landscape, which has posed financial pressure through reduced reimbursements.
“Led by co-workers and physicians throughout our health system, we remain focused on adapting to the changes in our industry by providing all the care our patients need,” Hove said “At the same time, the headwinds of health care reform have given us the opportunity to redouble our efforts to run our organization as efficiently as possible. The results produced by our long-term solutions will considerably benefit our region.”
In response to the industrywide change to health care delivery occurring more frequently in outpatient settings, Wellmont has continued to pursue a strategy of developing urgent care facilities. Wellmont opened an urgent care clinic on State Street in Bristol and another one on Judge Gresham Road in Gray in 2016 and then became the owner of Greeneville Urgent Care this year when Takoma Regional Hospital and Takoma Medical Associates were integrated into the health system.
Wellmont now has 11 urgent care facilities, the most of any organization in the region, as well as an after-hours clinic.
The Wellmont CVA Heart Institute expanded its outpatient services with the opening of the Bill Gatton Center for Advanced Cardiac Rehab, which teaches patients about improving their way of life as much as it strengthens their heart muscles. This occurs in conjunction with Pritikin ICR (Intensive Cardiac Rehabilitation) by blending exercise with knowledge of healthy lifestyles and computer-based learning opportunities.
Meanwhile, Wellmont Medical Associates, the umbrella organization for most integrated physicians, has experienced major growth in office visits, total patient encounters, new patient visits and revenues. The physician-led, professionally managed organization was still a leader in controlling blood pressure, receiving the Most Improved Award among medical groups with fewer than 150 physicians from American Medical Group Foundation.
One of the major areas where Wellmont has performed significant work is with the classification by insurance companies of many patients who stay in the hospital for a short time as observation rather than inpatient. Observation status generally means the insurance company pays less and the patient pays more for his or her hospital and subsequent care, and Wellmont has devoted considerable attention toward appropriately classifying the patient’s status. This advocacy has significantly increased the health system’s bottom line.
Efforts by Wellmont’s supply chain to standardize processes and seek savings across the health system have made considerable headway. Wellmont has saved millions of dollars in completed initiatives and others that are underway through beneficial partnerships. The organization is also further pursuing its systemwide efforts to examine opportunities to reduce waste and operate more efficiently.
“We need to remain vigilant to explore additional methods to meet our patients’ needs and respond to the financial realities facing all health care organizations,” said Todd Dougan, Wellmont’s chief financial officer. “Our physicians and co-workers have worked admirably to be agile in our care delivery models, and that has produced exceptional results. We understand we cannot rest on our laurels but instead need to explore more opportunities to show our expertise in this arena.”
To foster Wellmont’s long-term success, the organization has been engaged in a merger process with Mountain States Health Alliance, which would allow both entities to achieve further efficiencies that can be reinvested in the region to address some of the most pressing health needs.
Should the merger receive needed approvals from Tennessee and Virginia, Wellmont and Mountain States have proposed to invest $450 million in a comprehensive set of programs that will advance health care in the area. These include children’s health, service delivery in rural areas, addiction treatment, substance abuse prevention and increased academic and research opportunities.
S&P said it believes the proposed merger would create a healthier system that is better positioned to thrive during the further evolution of health care delivery. The company said it would also help providers who will accept more financial risk for managing their patients’ health.
“Our entire clinical and administrative team have performed remarkably well under these challenging circumstances and are to be commended,” said Roger Leonard, chairman of the health system’s board of directors. “We have made great strides in strengthening our health system but will need to complete the merger to ensure we have sufficient resources to make much-needed investments going forward in clinical staff, clinical services as well as population and behavioral health.”