EMHS credit rating downgraded

Posted Feb. 06, 2009, at 12:27 p.m.

BREWER, Maine — Standard and Poor’s financial services agency has downgraded Eastern Maine Healthcare Systems’ credit rating from A+ to A-, primarily based on the $115 million in backlogged Medicaid payments owed to EMHS member hospitals by the state of Maine.

In addition, the organization has experienced “weakening profitability with thin margins” for the last three years, and is operating at a loss in the current fiscal year, according to a statement from Standard and Poor’s dated earlier this week.

The rating change will make it more costly for EMHS and its affiliates to borrow money for big-ticket purchases and construction, said Dan Coffey, vice president and chief financial officer at EMHS.

The rating is profoundly affected by the $115 million owed by MaineCare, Maine’s Medicaid program, to the seven member hospitals in the EMHS system, including $74 million owed to Eastern Maine Medical Center in Bangor, the system’s flagship facility, Coffey said.

“The unfairness here is that the state enjoys a AA rating from Standard & Poor’s,” Coffey said.

Coffey said EMHS operated at a $1.2 million loss in the first quarter of the current fiscal year, which began Oct. 1.

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