Fitch Ratings has downgraded its rating that assesses Heritage Valley Health System’s vulnerability of default to A+ from AA-.
The downgrade of the hospital system’s reflects “several years of sizeable operating losses” and ongoing challenges that emerged before the covid-19 pandemic hit in 2020.
The report cited pressures due to lagging inpatient volumes, inflation and high labor cost. Heritage Valley, like many other hospitals across the country, have racked up expenses related to physician recruitment and using agencies to plug staffing shortages.
However, Fitch maintains a stable outlook for the system, which operates in Beaver, Sewickley and Kennedy.
Management’s plan to deal with losses “should lead to some improvement in operating performance in fiscal 2024,” the firm wrote. “Fitch believes that operating results will likely remain negative over the near term as the recovery is expected to be gradual.”
Fitch also noted that the health care provider is holding its own in an industry marked by acquisitions and consolidations, where UPMC and Highmark Health dominate the region.
Heritage Valley’s “solid business position” is “supported by its leading market share in its primary service area, which it has maintained despite competition in the greater Pittsburgh healthcare market and a favorable pay mix,” Fitch said.
