Citing steady and stable management team, positive operating performance pre-pandemic, solid vision and execution of merger strategy, improvement of quality and good balance sheet management, S&P Global Ratings reasserts Ballad Health’s “A-” rating with a stable outlook
JOHNSON CITY, Tenn., May 27, 2022 (GLOBE NEWSWIRE) -- Days after Fitch Ratings issued its “A” rating on Ballad Health’s credit, Standard and Poor’s issued its own report, concluding it affirms Ballad Health’s “A-” credit rating with a stable outlook.
S&P Global Ratings’ report cites both pre-pandemic performance of Ballad Health in its execution of the merger between Mountain States Health Alliance and Wellmont Health System, as well as its assessment of Ballad Health’s performance during, and emerging from, the pandemic.
Ballad Health governance and management performance related to merger and pandemic
“In our opinion, Ballad has an experienced management team that has responded well to the challenges of the pandemic and taken a proactive and purposeful approach to the merger that includes developing a strong strategic vision, setting explicit financial and non-financial goals, aligning executive and functional leadership, integrating cultures, and leveraging integration best practices,” stated the S&P Global Ratings report. “Furthermore, we believe management is making some difficult decisions around the need to consolidate services across the system, and to improve quality and performance, while maintaining access across the region.”
“Before the pandemic, Ballad was coming off a positive operating performance in fiscal 2019, as management was making progress on many fronts, and was active in implementing cost reductions and efficiencies to maintain positive operations,” the report added.
The report cites that Ballad Health has achieved reduction of healthcare costs exceeding $194 million, underscoring that Ballad Health has reduced the cost of healthcare for the Appalachian Highlands.
“The S&P report holistically reviewed Ballad Health’s financial and non-financial performance before and during the pandemic, and concluded that Ballad Health has, in fact, reduced the costs of healthcare for our region by executing on the strategies we established in 2017 and complying with the terms set out by the States in our merger agreements,” said Ballad Health Chairman and Chief Executive Officer Alan Levine. “The Board of Directors has been effective in its governance and oversight of this complex process, and the results are objectively clear. Ballad Health has kept its promises of delivering lower costs and better quality. We remain committed to this in the future.”
In its report, S&P Global cites some headwinds faced by the hospital industry related to the pandemic, which are impacting Ballad Health.
“In our view, partially offsetting rating factors include our assessment of Ballad’s near-term uncertainty about the pace of rebound in business volume, and likely elevated expense pressures related to labor and supplies, and its challenged payer mix with a modestly declining commercial mix, including reliance on governmental payers, and high reliance on special funding. The pandemic and higher costs have resulted in recent financial pressures that could persist in the near-term,” the report said.
“With all the pressure on our team members over the past two years, the Board of Directors and management team of Ballad Health made a decision to invest heavily in our frontline team,” Levine said. “We have increased wages by more than $120 million and invested more than $100 million in utilizing contract labor to help with the workload brought by the surges in COVID-19, combined with significant national staffing shortages. Our board also approved more than $30 million to be invested in developing 13 childcare centers for our team members to utilize and expanded our employee assistance programs. And our board authorized several bonuses for frontline team members worth more than $20 million as a show of appreciation for the hard work and commitment demonstrated by our Ballad Health family. Clearly, we recognize our best asset is our 13,000-member Ballad Health family, and we are committed to continuing leaning into their needs as they serve our region.”
In addition to the direct investment in team members, the Ballad Health Board of Directors authorized a $10 million investment into the creation of the Appalachian Highlands Center for Nursing Advancement at East Tennessee State University. This investment was underscored with support from the Tennessee legislature and governor, who matched it with a $1 million annual commitment to transform the center into the Tennessee Center for Nursing.
The S&P Global report considers the increased wages paid to team members and support for nursing in their analysis of ongoing wage cost pressure.
“On behalf of the board of directors, I can say unequivocally our focus is on ensuring our team members are delivering the highest-quality care for the people who entrust us with their care, and we believe the investments we are making in our team member well-being is essential,” said Lead Independent Director David Lester. “If we properly support our team, we believe it will result in the achievement of our mission.”
The Standard and Poor’s report is attached and available here.
More information about Ballad Health is available at www.balladhealth.org.
About Ballad Health
Ballad Health is an integrated community health improvement organization serving 29 counties of the Appalachian Highlands in Northeast Tennessee, Southwest Virginia, Northwest North Carolina and Southeast Kentucky. Our system of 21 hospitals, post-acute care and behavioral health services, and a large multi-specialty group physician practice works closely with an active independent medical community and community stakeholders to improve the health and well-being of close to one million people. By leading in the adoption of value-based payments, addressing health-related social needs, funding clinical and health systems research and committing to long-term investments in strong children and families in our region, Ballad Health is striving to become a national model for rural health and healthcare. Learn more at www.BalladHealth.org.
CONTACT: Ashlea Ramey Ballad Health 423-863-2383 firstname.lastname@example.org