JOHNSON CITY, Tenn., May 24, 2022 (GLOBE NEWSWIRE) -- Citing Ballad Health’s strong financial planning and considerable credit resiliency, Fitch Ratings today announced it has affirmed Ballad Health’s “A” credit rating with a Stable outlook.
This credit rating affects Ballad Health’s series of debt instruments, as well as Ballad Health’s planned refunding of variable rate demand bonds expected to be issued this summer. The new issue, up to $176 million, is designed to reduce existing cost of credit, saving Ballad Health several millions of dollars annually in interest. Ballad Health will not be assuming any incremental new debt as it restructures existing higher interest debt, replacing it with lower interest vehicles and utilizing appropriate tax-exempt financing for eligible capital expenditures.
“Despite persistent pressure and disruption from the pandemic, Ballad has maintained its operating and financial profile throughout, demonstrating considerable credit resiliency,” said the Fitch report. “As with most in the sector, Ballad is experiencing escalating pressure on operating expenses related to staffing shortages, supply chain issues and inflation. These pressures mounted in fiscal 2022 as Ballad faced simultaneous headwinds of added labor costs, general inflationary pressure and the Omicron variant surge at the end of 2021.”
“Ballad Health has prioritized investing in our workforce as the labor shortages became more intensive over the last two years,” stated Ballad Health Chairman and Chief Executive Officer Alan Levine. “We have invested an additional $120 million into base wages for our nurses and frontline caregivers, and while the shortage remains severe, it has been clear to the rating agencies that our efforts have begun to show some stabilization.”
In addition to investing in wage increases for caregivers, Ballad Health also provided more than $20 million in special appreciation bonuses for all team members and invested $10 million into the creation of the new Appalachian Highlands Center for Nursing Advancement at East Tennessee State University. This center is designed to collaborate with all regional nursing programs to enhance the pipeline of nurses and nursing support professionals for the region. The creation of the center attracted the attention of Tennessee Gov. Bill Lee and the Tennessee legislature, which provided $1 million of annual funding and created, by statute, the Tennessee Center for Nursing at ETSU.
“The Board of Directors of Ballad Health remains focused on ensuring our most important asset – our team members – is taken care of as we mitigate the effects of the national labor shortages,” said Lead Independent Director David Lester. “This is why we authorized management to invest more than $30 million to expand childcare options for our team members throughout the region with the addition of 13 new childcare centers. And it’s why we invested in expansion of the Employee Assistance Program. We know that in order to achieve our mission, we must ensure a stable healthcare delivery workforce.”
“The Fitch ratings recognize that the labor and inflationary pressure on Ballad Health is not unique,” Levine said, “but they also recognize that we have a plan for dealing with it, and based on our past performance, they have confidence we can execute on our plan. Our plan was developed with input from our team members, as we all – together – want to ensure they have the resources they need to provide the best possible care.”
“We know the labor shortages are being felt by our team members and by our patients,” said Dr. Clay Runnels, Chief Physician Executive of Ballad Health. “As a practicing ER physician myself, I know the impact this can have on wait times and clinician burnout. This is why I’m so proud of the major investment being made by Ballad Health’s Board of Directors and management in our frontline staff. The combination of strategies is already beginning to work, and we plan to stay focused on this in the coming 24 to 36 months.”
According to a recent national survey of nursing leaders, 92% of respondents indicate the nursing shortage will intensify in the coming 18 months, while other reports predict that more than 1 million new nurses will be needed by 2030.
“We believe the credit rating agencies appreciate our candor about the problem, and that our Board of Directors has worked with us to invest in our efforts to retain and recruit,” Levine said. “Most importantly, they trust our team based on our performance, and I have no doubt the 13,000 people who make up the Ballad Health family will continue to achieve the expectations of our stakeholders.”
The Fitch Ratings report is available here: https://www.fitchratings.com/research/us-public-finance/fitch-affirms-ballad-health-tn-at-a-outlook-stable-23-05-2022. More information about Ballad Health is available at www.balladhealth.org.
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About Ballad Health
Ballad Health is an integrated community health improvement organization serving 29 counties of the Appalachian Highlands in Northeast Tennessee, Southwest Virginia, Northwest North Carolina and Southeast Kentucky. Our system of 21 hospitals, post-acute care and behavioral health services, and a large multi-specialty group physician practice works closely with an active independent medical community and community stakeholders to improve the health and well-being of close to one million people. By leading in the adoption of value-based payments, addressing health-related social needs, funding clinical and health systems research and committing to long-term investments in strong children and families in our region, Ballad Health is striving to become a national model for rural health and healthcare. Learn more at www.BalladHealth.org.
