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UPDATED: Elmhurst Memorial Healthcare's Financial Health in Question as its Rating is Downgraded Again

Fitch Ratings cites EMHC's "weak operating performance," lagging patient volume and various other problems.

 

UPDATED: Jan. 30, 11:45 a.m.:

Elmhurst Memorial Hospital has released an official statement in response to the information published this week:

While early fiscal Year 2013 volumes were lower than anticipated (July in particular), inpatient and outpatient volumes have picked up significantly in recent months, and the health system continues to see growth in spite of the fact that volumes throughout the market are flat or declining. 

“We will continue to manage through what is a very challenging healthcare environment,” said James Doyle, executive vice president and chief financial officer for Elmhurst Memorial Healthcare.

Original story:

The financial rating for Elmhurst Memorial Healthcare was again downgraded by Fitch Ratings from BBB+ to BBB, according to a Reuters article dated Jan. 29.

EMHC is holding nearly $500 million in debt, secured by a pledge of gross revenue.

The article states that the downgrade "reflects EMH's continued weak operating performance and debt service coverage levels compared to Fitch's expectations outlined in the February 2011 surveillance review."

In July 2012, Fitch downgraded EMHC from A- to BBB+.

The A-, or stable rating, was awarded in February 2011. In October of that year, EMHC announced plans to merge with Northwestern Memorial Healthcare, but that venture was abandoned in June 2012.

EMHC is currently in merger talks with Edward Hospital and Health Services. Fitch will assess any financial impact of that merger, should it be completed.

Generally speaking, the news for EMHC's near-term financial health is not good, according to Fitch. Also contributing to the downgrade is EMH's weak cash-on-hand position and negative future outlook.

"Liquidity is not expected to improve, as EMH is constructing a $21 million cancer center, which will mostly be funded from cash flow," according to Fitch.

Additionally, the hospital has not seen the volume of patients that had been expected, according to Fitch.

"Patient volumes continue to lag expectations since the move to the new facility, reflecting overall softness in the service area."

The article also cites high expenses, although EMH has been working to reduce staffing and expenses, and a highly competitive market, with Good Samaritan Hospital (rated AA), Alexian Brothers (rated A-), Westlake and Hinsdale hospitals nearby.

Fitch expects EMH to improve its financial outlook and "stablize operations."

For the full report, click here.

Earlier this month, Moody's Investors Service revised the hospital's outlook from stable to negative.

Said Moody's:

"The negative outlook reflects EMHC's downturn in operating margins, from an adjusted operating cash flow margin of 7.4% in FY 2012 to 4.3% through five months FY 2013 (after EMHC had shown considerable improvement in the second half of FY 2012). While the decline in performance in interim FY 2013 is due in part to an increase in non-cash pension expense, core operating challenges surfaced such as inpatient volume declines (6.4% decrease in five months FY 2013, compared to the same period FY 2012). We are particularly sensitive to the weak performance in interim FY 2013 given EMHC's high debt load and debt/swap structure."

Read the full report here.


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Related Topics: Downgrade, Elmhurst Memorial Healthcare, Fitch's Ratings, Moody's, and debt service

Jim R

7:22 am on Wednesday, January 30, 2013

There turning away patients by not accepting Blue Cross Blue Shield Select coverage does not help. My wife and I who are on medicare with BCBS as our supplemental insurance will go to another hospital for non emergency situations that is one of BCBS Select program even though Elmhurst is closer. See the BCBS Select hospitals at the following link. http://www.bcbsil.com/coverage/medicare/medhospitals.html

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Sheri

2:49 pm on Wednesday, January 30, 2013

With the exception of the Medicare Select plan, Elmhurst Memorial Hospital does, in fact, participate in most Blue Cross Blue Shield plans.

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Jim R

8:07 pm on Wednesday, January 30, 2013

Sheri,
I realize that. Because of them not accepting it though a patient can either pay more on their supplemental insurance or pay a more on deductibles. Just shows Elmhurst Hospital lack of concern on Medicare. Unlike what many think people on medicare pay around 104 a month on medicare and for more complete coverage monthly fees for a supplemental insurance. The latter is where Elmhurst hurts the medicare patient.

Pat Gerace

7:29 am on Wednesday, January 30, 2013

The Facility Fee they charge to use Doctors at the Center for Health is causing people to change doctors to doctors who may be at other hospitals.

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Julie Fendley

10:21 am on Wednesday, January 30, 2013

I totally agree with this. Anytime you see a doctor at the center for health, you are charged a fee as if you had gone to the hospital. I also found that for a basic x-ray at M&M Orthopedics Center for Health, the charge was $488, and the same x-ray at M&M Orthopedics in the Professional building (while in same building structure, but not run by the hospital), the charge was $105. The same doctors practice at both. Which would you choose??

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Ellafitz

12:23 pm on Wednesday, January 30, 2013

DITTO! We changed all of our regular doctors because of the facility fee. And what is happening with the old hospital building? It looks like an abandoned building!

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Sheri

2:59 pm on Wednesday, January 30, 2013

Just a clarification on what the facility fee represents - in 2011, physician practices that are affiliates of Elmhurst Memorial Hospital made the transition to hospital - based designation. A hospital-based facility is very similar to a physician’s office, but requires that bills are separated into two portions - a reduced physician bill
for the services and procedures performed by the physician and a hospital bill for all other costs of the visit, like nursing staff, office space, clerical support, and supplies.

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Jim Johston

3:33 pm on Wednesday, January 30, 2013

Sheri, I am sure on paper that is what the fee represents. But as patients, all we care about is what our insurance will or will not cover. Nearly all insurance plans will not cover the facility fee so the patient is left with the cost. If EMH can't figure out a way to bill this so insurance will cover it, they should expect to lose patients.

There should really be no surprise why DuPage Medical Group's pediatrics practice is growing so much in Downtown Elmhurst.

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Dorothy W Ray

6:41 am on Thursday, January 31, 2013

We are in the process of finding new doctors for our family of six do to the Facility Fee. We love our doctors at the CFH, but the additional costs are killing the budget!

Jim Johston

9:53 am on Wednesday, January 30, 2013

It is the facility charge that turned us away. They arrogance they displayed by instituting that charge was ridiculous. As long as that charge is in place, they will continue to lose patients and new patients will find other options.

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Just sayin...

10:31 am on Wednesday, January 30, 2013

Additionally, if you visit a pcp at the Center for Health, they send a routine blood test to the hospital instead of the lab they previously used. As a result, the patient ends up paying the medical deductible on their insurance + the balance. I never paid anything but an office co-pay for years.
Seems to me that they didn't need their own lucrative cancer center. They already had one at the Center for Health. Just more corporatized healthcare brought on by simple greed. Now they are too big for their britches and I believe that many of the physicians are the investors.

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Jim R

10:31 am on Wednesday, January 30, 2013

My first bad experience with Elmhurst Hospital was a few years ago when they dropped the acceptance of my insurance in October. Fortunately my doctors also were at another hospital. Why should they be considered non-profit as their approach seems to be for profit other than the way they handle their money. They need to be taken over by another hospital, as a merger may not be enough to restrain those who put them in this mess.

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Jim Johston

11:10 am on Wednesday, January 30, 2013

Elmhurst Hospital clearly puts the patient last and corporate greed first. I couldn't be happier that they are in such dire straights. A brand new facility won't sit empty for long. Someone will come in a buy up the pieces at a large discount and the investors will be left wondering what happened.

The morale is if you don't do a good job of serving your clients, you won't survive.

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Dave

12:40 pm on Wednesday, January 30, 2013

If you actually read the Fitch and Moody's reports, they essentially say that, while EMH's financial performance and status is not what had been projected by these agencies, the long-term (and even short-term) outlook is far from dire. The Fitch report in particular assigns a "Stable Outlook" to EMH and states: "The Stable Outlook reflects Fitch's expectation that EMH will continue to achieve the benefits of its new facility and improve its financial performance over the near term. EMH should be able to stabilize operations and build up its liquidity with the completion of the Cancer Center. " So put away the champagne, Jim, EMH is not about to go under. You also might consider that, if that were to happen, thousands of hard-working people, most of whom work very hard for very modest pay, will loose their jobs.

A final note -- as not for profit entity, EMH does not have "investors."

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Jim Johston

12:48 pm on Wednesday, January 30, 2013

I think you missed my point. If it were to go under, it would be immediately picked up by a new owner. The fact that the facility is brand new and the long term outlook on healthcare is positive ensures that. Most people would not lose their jobs, they would simply work for a new corporate owner. The only people that lose in this situation is the executives in charge and the current bondholders. Personally, I don't feel bad for either of those groups. Their policies over the last few years have completely alienated the community.

If you really believe EMH is "non-profit", then I have a bridge to sell you, too. EMH is currently fighting to regain their "non-profit" status, and if they win they expect Elmhurst to pay back all the property taxes since the Center of Health was built, which predates the hospital for 10 years. EMH overextended themselves on this building and they are expecting the people of Elmhurst to bail them out. I won't have any part of it. When your taxes go up to cover this, will you still blindly defend them? It isn't the workers I am against, it is the executives at the hospital that created this situation.

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Just sayin...

8:01 pm on Wednesday, January 30, 2013

Jim Johston is right on and "Dave, don't be so sure about who the investors are/were. You may be extremely surprised.

Lee A

12:36 pm on Wednesday, January 30, 2013

Lee A
The facilities charge caused me to leave an excellent physician. It indicates the they wish to practice finance first and outpatient care second.

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Gort

12:40 pm on Wednesday, January 30, 2013

You go to Loyola for cancer, Rush for transplants and ortho , Northwestern for gastro and cardio surgery. You go to Elmhurst because the ambulance took you there because it was the closest. Once stabilized, you go to one of the above hospitals ASAP.

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JL

3:12 pm on Wednesday, January 30, 2013

I totally agree. My child was taken to Elmhurst and then transferred to Lutheran General. The care she received at Elmhurst was terrible. Lutheran General was outstanding. Thank goodness Elmhurst's mistakes did not cause paralysis.

Tim VoiceOfReason

1:16 pm on Wednesday, January 30, 2013

I live in Elmhurst and will take my chances going to Good Sam or Maywood. Life is short, Elmhurst Memorial can make it shorter.

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Likes the Facts

2:02 pm on Wednesday, January 30, 2013

Alexian Bros. is a much better hospital --the workers, nurses and doctors really care about the patients. My last two experiences at Elmhurst make me want to go elsewhere and the billing dept with all the "extras" stinks. Mr. Doyle, and hospital administrators, are you listening? Non-profit?????? No way!

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Rick M.

6:11 pm on Wednesday, January 30, 2013

I as well as my immediater and extended family will go out of our way NOT to go to EMH, mainly for their financial practices. I personally hope they go broke.

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fittnessfanatic

11:24 pm on Wednesday, January 30, 2013

If they gain back their tax exempt status the taxpayers of E,Murat will really suffer. The money will have to come from the taxing bodies. Where the heck is the school district going to get that money. Further more how absurd to have to repay it. The board of directors and trustees and governors should be ashamed. How many of them are Elmhurst residents.

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Rick M.

12:48 am on Thursday, January 31, 2013

My father in law went for an outpatient gall bladder surgery that took 3 days and $35000. Despite Medicare and a BC secondary; EMH is threatening to take him to collection for a $1,700 balance. There was no reason for him to stay 3 days; they simply ran expensive tests to justify the stay. I drive by that building everyday and curse it.

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mm

11:59 am on Friday, February 1, 2013

EMHC is holding nearly $500 million in debt, secured by Mr Franza's pledge of gross revenue.

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Julie Fendley

5:27 pm on Saturday, February 2, 2013

I'd like to add that if you go your physician for a once a year free "well visit", if you talk about anything that may be of concern, the doctor charts it, and your free "well visit is no longer free. After the second time of being charged for an office visit, I realized that was no mistake. Another example of greed. So, I don't want to waste my time to go talk about... the weather.

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Peggy Suratt

8:31 pm on Sunday, February 3, 2013

if the executives that ran EMH were politicians, they would be impeached/recalled, or at a minimum, voted out of office. but since they are beholden to only a hand picked do nothing Board of Directors (that has no real power because it's a non-profit board), those that engineered this massive screw up do what corporate people do when they screw up; they look for a merger to pull their *%^s out of the fire.

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Daniel Cusack

9:32 pm on Monday, February 4, 2013

Right on target. Someone should investigate Fronza's sweetheart retirement deal paid for by Elmhurst taxpayers.

Ann

8:37 pm on Saturday, March 16, 2013

Worst hospital ever.... Go elsewhere or plan your funeral beforehand...

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