Genesis Receives Standard & Poor's Bond Rating
Genesis HealthCare System received from Standard & Poor’s (S&P) Rating Services’ a ‘BB+’ long-term rating on $294 million of fixed rate revenue bonds. Proceeds from the sale of the bonds will primarily be used to fund the development of a new Genesis medical center, including construction of a new addition, renovation of the organization’s existing Bethesda Hospital and a cancer center. Plans for the new medical center have been underway for more than two years.
According to S&P’s report, the rating reflects Genesis’ improved operating results from previous years, stable unrestricted liquidity, and solid business position in Muskingum County. The report also noted that Genesis is well prepared for health care reform.
“We appreciate S&P’s review of Genesis and respect the time and analysis they gave our rating,” said Matthew Perry, Genesis’ President & CEO. “The new medical center is a long-term investment in our community, and S&P recognized it will transform how health care is delivered in our area and will better position us for success in the future. When the new medical center is completed, Genesis will be a more efficient provider of quality health care for the people we serve.”
In addition to construction costs, bond proceeds will also cover capital equipment costs, refinancing of existing debt, bond reserves, financing costs associated with the bonds, and a 10 percent allowance for potential unexpected project costs.
“The S&P rating is what we anticipated and what we built into our financial proforma for the new medical center project,” said Paul Masterson, Genesis’ Chief Financial Officer. “We are confident the rating will enable us to sell the bonds quickly – we expect this to happen by early May.”
The construction project will include renovation of the existing Bethesda Hospital, construction of a large connected addition, and a new cancer center. The expanded medical center will include all private patient rooms and Centers of Excellence for heart and vascular, cancer, orthopedics, women’s health, neuroscience and trauma/emergency. Construction will begin in a few weeks, and the new medical center is scheduled to open in 2015.
The project is expected to generate between $250 million to $310 million in economic impact throughout the community during construction. Genesis estimates operational savings of $15 to $18 million each year by combining duplicated services and reducing the maintenance needs of aging buildings. Those funds can be redirected to better serve the community – expanding specialized services, implementing new treatment and diagnostic technology, creating more jobs and helping to keep the community’s health care costs down.
In addition to the bond issue, the organization has launched a capital campaign with a goal to raise $15 million. To date, the campaign has reached $12 million with plans for a broad community effort to begin this summer.
“We were pleased S&P recognized the new medical center will enable the elimination of duplicative services, provide more convenient care, and enhance the patient experience,” said Perry. “This is another positive step for us as we continue to focus on our mission of providing compassionate, quality health care.”