Adventist Health Hanford

published on February 6, 2018 - 11:01 AM
Written by The Business Journal Staff

Adventist Health has received good news — an “A” rating and revised positive outlook from Fitch Ratings, Inc.

The health care group with medical centers in Reedley, Selma and Hanford and dozens of medical offices all over the Central Valley received the shining marks on approximately $930 million in outstanding rated debt, with Fitch indicating confidence that Adventist will continue to see strong margins in the future.

Fitch revised Adventist’s outlook of future performance from “stable” to “positive” in its latest report.

“Adventist Health’s ability to achieve a leading position in acute care in multiple growing markets, coupled with strong cost management and growth over the past several years, has truly been a remarkable for us,” said Joe Reppert, CFO for Adventist Health. “Providing critical care for underserved populations is challenging, but this revised outlook from stable to positive is both a confirmation and recognition of a dedicated, disciplined staff that has worked strategically and tirelessly to do the right thing for our communities.”

Based in Roseville, Adventist Health serves more than 75 communities in California, Oregon and Hawaii. The network runs more than 280 clinics and 19 hospitals.

“In many of our markets, particularly those in California, Adventist Health is the sole provider serving largely rural populations,” Reppert added. “Yet, our market shares have been driven largely because we operate in the space that not many other providers are attempting to operate in, which is something we are extremely proud of and inspired by in these exciting times of change.”

Despite more than 30 percent of the Adventist Health payer mix coming from Medicaid—which represents a challenge to credit—Fitch highlighted solid market positions in multiple states.

Fitch also foresees continued good operations and predicts Adventist Health will soon begin generating EBITDA margins of 10 to 11 percent—up from 9 percent last year—with continued cost controls that support its growth and capital projections.

The network has taken steps to reduce its costs. Adventist Health Central Valley plans to transition 320 of its local jobs to Cerner Corp., a global leader in health care technology. The expanded partnership with Cerner is expected to save the organization a reported $300 million over the next three years.

“We’re expanding our partnership with Cerner to innovate more quickly to improve our patients’ experience,” said Andrea Kofl, network president, in a statement last month. “The change affects 320 team members in the Valley, all of whom are receiving job offers from Cerner and will continue to be part of our family.”

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