National Rating Agencies Cite Quality, Cost Efficiency, Access and Performance in Affirming Ballad Health Credit Ratings

Despite the ongoing negative outlook for the hospital industry, and against an avalanche of downgrades nationwide, Fitch Ratings, Moody’s and S&P Global Ratings have affirmed Ballad Health’s “A” ratings, citing improved quality, lower healthcare costs

Ballad Health today announced that all three national credit rating agencies have affirmed its “A” ratings, while keeping their outlook for the health system as Stable. This announcement comes after Standard and Poor’s announced in January that health system downgrades are outpacing upgrades by double.

“Despite significant sector headwinds, Ballad Health has continued to operate at a high level due in part to its long tenured and seasoned management team and the merger of Mountain States Health Alliance and Wellmont, which continues to mature and has resulted in a more streamlined approach to health care delivery in the service area, various cost efficiencies and improvements in quality,” said the report by Fitch Ratings.

S&P Global Ratings added: “In our opinion, Ballad has an experienced management team that has responded well to the challenges of the pandemic and taken a proactive approach to the merger that includes developing a strong strategic vision, setting explicit financial and non-financial goals, aligning executive and functional leadership, integrating cultures, and leveraging integration best practices. Furthermore, we believe management is making some difficult decisions around the need to consolidate services across the system, and to improve quality and performance, while maintaining access across the region. Management continues to execute on key strategies following the 2018 merger of Mountain States Health Alliance and Wellmont, some of which include enhancing its digital and information technology capabilities…with increased access and expansion of services in core markets, and continued consolidation where necessary to gain efficiencies and improve patient quality. In our opinion, management is successfully executing its integration strategy and realizing synergies, despite the disruption caused by the COVID-19 pandemic and increased labor and supply pressures.”

“As we steadily recover from the worst staffing shortage in our nation’s history, our team of more than 13,000 team members, physicians, volunteers and partner providers deserves enormous credit,” said Ballad Health Chairman and Chief Executive Officer Alan Levine. “The rating agencies are unbiased and objective arbiters of health system performance, and their reports all clearly articulate that we have been successful at reducing the cost of healthcare, improving quality and operating comparatively as one of the best health systems in America. The data is objective and clear. I am very proud of our team.”

All the reports cited the ongoing challenges for not-for-profit hospitals, which face unprecedented headwinds with massive staffing shortages, wage and supply cost inflation and financial losses. It has been reported that almost 60% of hospitals in Tennessee are losing money, and hospitals throughout America are closing or significantly curtailing services.

“Since our merger creating Ballad Health, every single community in our footprint that had a hospital five years ago still has one, and in fact, we reopened one in Lee County, Virginia, that had been previously closed,” said David Lester, a Ballad Health board member who chaired the strategic options committee for legacy Wellmont Health System seven years ago. “Going into this, we stressed the need to keep access to these rural hospitals, the desire to improve quality and our goal to reduce the cost of healthcare. Difficult decisions were required along the way, but despite all the headwinds, despite COVID-19 and despite some people’s doubts, the reality is that our health system is performing as well as, or better than, some of the best systems in America. Our region can be proud of what we have here.”

As an example of improved quality, Levine and Lester pointed to the fact that the region has never had an American College of Surgeons-verified Level 1 Trauma Center in its history, and never before had any of its Level 1 Trauma Center received a perfect survey from the state. Today, the region’s Level 1 Trauma Center has received a perfect three-year accreditation from the State of Tennessee, with no findings, and the trauma center has been named by an independent organization that ranks hospitals as one of the top 10% performing trauma centers in the nation for patient safety. Recent changes to enhance orthopedic trauma have also already resulted in material improvements in the outcome measures for orthopedic trauma care.

“Just looking at the improvements to our trauma network, the reduction in patient mortality, the improvements in outcomes and the amount of research we are now producing with our partners at East Tennessee State University, I’m confident our region will have, for the first time in history, an ACS-Verified Level 1 Trauma Center,” Levine said. “This is good for our quality of life, and it will be an invaluable asset as we further grow our economy.”

In past reports, Moody’s pointed to Ballad Health’s “decrease in readmission rates as quality metrics improve and care shifts to outpatient and lower cost settings.” When Moody’s last reported on Ballad Health, the health system was performing in the top 10% of hospitals on five key quality measures. Today, Ballad Health is performing among the top 10% on eight of these quality measures, making it among the best performing in the nation. At the same time, Ballad Health’s readmission rates are the lowest they’ve ever been, and the health system performed better on the Medicare readmissions program than it ever has – with the most recent report from Medicare being the first to include data solely posted since the merger (prior year data included rolling data from years before Ballad Health was created).

“Ballad Health has remained focused on delivering high-quality care, reducing the cost of healthcare and being good stewards of our resources,” Levine said. “We are pleased all three agencies have cited our improved quality and lower cost of care, because it demonstrates our strategy of reducing unnecessary duplication, investing in needed services and using our scale and resources to expand access can work. Already, we know we have reduced the cost of healthcare by more than $200 million annually, which benefits our employers, patients and taxpayers.”