NEW ORLEANS – Moody’s Investors Service upgraded its current positive rating from a Baa1 to A3 and Fitch Ratings has upheld its financial outlook on Ochsner Health System at an A-. Both affirmed a stable outlook.
Moody’s upgrade was based in part on “Ochsner’s multi-year improvement in operating performance and the execution of their strategy. The upgrade to A3 reflects the system’s continued investment in several strategies that has enabled Ochsner to expand its footprint across Louisiana and into Mississippi while continuing to focus on key service lines while growing the brand equity.”
The Fitch Ratings reflects the organization’s credit strengths, growing market position in its primary service area, a sizable base of employed physicians and experience with population health management. According to Fitch’s report, “Ochsner continues to increase the number of lives it manages, with approximately 55,000 lives in Southeast Louisiana under full risk contracts through capitated payments. Ochsner performs well under these contracts and continues to show the ability to bend the cost curve for the care of these patients while maintaining high quality.”
In addition, Fitch noted the following factors for maintaining its rating:
• Continued System Growth: Ochsner’s growth has been through a variety of affiliation strategies including clinical affiliations, management agreements, joint ventures and acquisitions. Ochsner’s regional referral strategy continues to see growth as well. Regional referrals increased by 16 percent in 2016 over 2015 to over 10,000 patients. In addition, discharges from patients more than 25 miles away grew by 6 percent in 2016 over 2015.
• Performance Improvement Sustained: Ochsner maintained financial improvement for the fourth year in a row through continued execution of expense management and efficiency initiatives. The management reports margin improvement totaled $187 million from 2014 through 2016. These initiatives have helped to blunt the effect of Medicaid cuts that Ochsner has absorbed over the years. The strong expense management, along with the increased size of the system, has led to more stability, with coverage remaining relatively stable over the last three years.
The complete Moody’s Investors Service rating report can be found here
The complete Fitch Ratings report can be found here