After two years of declining revenues and increased costs, St. Charles Health System received a ratings increase from S&P Global Ratings, indicating a level of confidence.

The financial rating agency said the health system has a lock on the hospital health care market in Central Oregon, has healthy cash reserves, an improved revenue stream from surgeries and cancer treatments and carried a light debt burden. All of these are a sign the health system can withstand any future financial headwinds, according to a S&P statement Feb. 7.

“We are very pleased that S&P has recognized the hard work our St. Charles caregivers have put into stabilizing our workforce and improving our financial position over the past year,” said Matt Swafford, St. Charles Health System chief financial officer.

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Since 2020, the S&P rating has been rated A, but its outlook was negative.

A new positive outlook allows the health system to tap into bonds at lower rates.

Last week, the ratings agency bumped up the outlook to stable, retaining the A rating. The move sends a message of confidence that as of November 2023, the health system is on the right track, Swafford said.

“This is welcome news,” said Katy Brooks, Bend Chamber of Commerce CEO. “A healthy hospital is a bedrock issue in Central Oregon to support our residents, families and employers. As we watch local hospitals struggle nationally, St. Charles success helps keep Central Oregon competitive in recruiting new talent.”

Some of the steps the health system has taken over the past two years include layoffs, stabilizing its workforce with more hiring and less dependence on higher paid traveling staff, changing the leadership at the top, and achieving sole community provider status with the U.S. Centers for Medicare and Medicaid Services.

Hiring Dr. Steve Gordon in 2023 was a good move for the health system as he lends credibility to the organization as a former physician, executive, and board member, according to the financial rating statement. Gordon, the financial reporting agency noted, remains focused on physician engagement, workforce rebuilding, and deeper accountability.

“In our view, (hiring Gordon) serves the organization well going forward,” according to the credit reporting agency.

The health system has benefited from the influx of new residents over the years, and that will help sustain a positive revenue stream going forward, the credit agency noted.

Previous coverage

After two years of losses, St. Charles Health System starts 2023 in the black

 

To serve those new residents, the credit agency noted efforts that the health system has employed to shore up its hiring and lighten its reliance on contract labor. The health system also settled a three-year labor contract with about 1,000 nurses represented by the Oregon Nurses Association that makes them among the highest paid in the state.

Under the terms of the contract, recent nurse graduates saw their salaries increase by 41% and seasoned nurses saw wages increase by 31% to 36% over the life of the contract.

“These improvements (in stabilizing the workforce) are not a result of one-time items, in our view, but rather the success of (the health system’s) integrated approach to strategic planning and performance improvement, with a keen focus on prioritization and deeper leadership accountability,” according to the statement by S&P.

“A positive outlook or higher rating could be considered if (the health system) is able to sustain current operating performance over the outlook period whilst growing balance sheet metrics to levels commensurate with a higher rating.”

“We are very pleased that S&P has recognized the hard work our St. Charles caregivers have put into stabilizing our workforce and improving our financial position over the past year.”

— Matt Swafford, St. Charles Health System chief financial officer