|New Wishard Hospital Groundbreaking|
Remember these Wishard bonds were financed out of the income stream of HHC, supposedly without raising taxes. Now it appears HHC will have to pay higher interest on the money borrowed to finance the facility. Not to worry though...the referendum that passed in 2009 provided that we taxpayers would be on the hook if the HCC could not pay for the facility out of its cash flow generated from from higher-than-normal Medicaid payments for its extensive nursing home operation.
Here are some tidbits from the report:
HOSPITAL OPERATIONS RISK: The rating downgrades reflects Fitch's increased focus on the financial risk related to the operation of the hospital as outlined in the July 15, 2011 press release 'Fitch Refines Methodology for Rating Tax-Supported Debt of Public Enterprises', which is available at 'www.fitchratings.com'.
CHALLENGED HOSPITAL FINANCIAL PERFORMANCE: HHC's Wishard Hospital financial operations are weak and vulnerable to changes to state and federal funding given the large number of Medicaid, Medicare and indigent patients. However, qualitative factors are strong, including an experienced management team.
STRONG SECURITY: Debt service on the bonds is secured by an unlimited ad valorem tax pledge of HHC, a component unit of the consolidated city of Indianapolis-Marion County. (Comment: we taxpayers are on the hook for the bonds to an unlimited amount.)
REPLACEMENT HOSPITAL FACILITY
HHC is legally obligated to fund the annual debt service on the 2010 A and B bonds using a dedicated property tax if other revenues are not sufficient to fully pay the bonds in any given year; however, HHC currently funds 100% of the debt service for these bonds through operating revenues. In addition, HHC will contribute $150 million ($80 million to date) in accumulated reserves to the Wishard replacement project, leaving approximately $150 million in reserves, which Fitch considers an adequate operating cushion.To see the rest of the report, click here.