June 21, 2013

Moody's: State debt payment is plus for Maine hospitals

By Jessica Hall jhall@pressherald.com
Staff Writer

Gov. Paul LePage's signing of the bill to pay $184 million owed to Maine's hospitals is "credit positive" for the 39 hospitals, especially those with many Medicaid patients, according to credit rating agency Moody's.

Moody's declaration of "credit positive" does not mean the hospitals' credit rating has changed. The rating agency only outlined that the payments would be a positive development for the hospitals that will help reduce receivables and increase cash on hand.

Earlier this month, LePage signed a bill to repay $184 million owed to the hospitals, which will trigger more than $300 million in federal matching funds.

Hospitals that treat a high percentage of patients insured under the MaineCare program will gain the most, including Eastern Maine Healthcare Systems in Bangor and MaineGeneral Health in Augusta.

Medicaid represents 19 percent of Eastern Maine's gross revenues and 16 percent of MaineGeneral's, compared to a median of 13 percent for rated not-for-profit hospitals across the U.S., according to Moody's.

Eastern Maine is owed a total of $72 million and MaineGeneral is owed $44.7 million, according to the Maine Department of Health and Human Services.

The buildup of receivables has contributed to comparatively low cash balances for hospitals in Maine, Moody's said.

Eastern Maine has 123 days of cash on hand and MaineGeneral has 107 days, both lower than Moody's rated national median of 165 days.

Even a partial payment from the state would improve hospital cash balances. Total estimated amounts due to Eastern Maine and MaineGeneral as of the latest fiscal year-end represent more than 30 percent of each systems' total cash, Moody's said.

Jessica Hall can be reached at 791-6316 or at:

jhall@pressherald.com

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