Spirits were high at the Tuesday night Ector County Hospital District Board meeting as board members received and discussed the recently downgraded Fitch rating, with eyes on improving that rating in the future.
ECHD’s issuer default rating was downgraded from BBB to BB+, a rating Fitch indicates as speculative, and received a revised rating outlook from negative to stable, Medical Center Health System CFO Robert Abernethy told the board.
Abernethy stressed to the board that the hospital is not in default for 2017, as they are well within their debt service coverage ratio covenant, and the rating does not predict the market value of bonds.
“The downgrade really cost us nothing at this point in time,” Abernethy said. “It does not impact the interest rate of the bond and it does not increase the cost of the bond.”
ECHD has $44.65 million hospital revenue refunding bonds from a 2010 bond series for the MCH Center for Health and Wellness, 8050 E. Highway 191, and MCH Center for Women and Infants, 500 W. Fourth St.
Abernethy told the board the stabilized rating was attributed to the recent boom in the local economy and to what the new leadership in Abernethy and the recently appointed CEO and President, Rick Napper, plan on accomplishing.
Now that the hospital has reached a plateau of stability, Abernethy said it was time to start climbing up the side of the canyon.
“Obviously, this is not what we wanted to happen” Napper said about the downgrade. “It was not unanticipated. I could have told you in October when I interviewed that I thought that was going to happen.”
Despite some of the issues brought up by Fitch, Napper said there were several things they were impressed with as well.
“They were very impressed with what we have planned as far as how we are going to correct the direction of the ship,” he said. “I can assure this board with great confidence that you will see some, I believe, significant changes over the next six months. In a year-and-a-half, we may be talking about how we are being talked about across the country.”
Napper said the hospital would be “releasing the hounds,” allowing the employees to help succeed and said the medical staff and physicians are wanting to jump on board and help turn the ship around.
“I just look forward to being able to have Robert stand up there when we talk about getting back to the A rating, and we will be there,” he said.
The recent satisfaction report showed strong signs of improvement. For the month of February, responsiveness of staff moved form the 8th percentile to the 58th percentile, communication medications went from the 6th percentile to the 77th percentile, and MD communication increased from the 13th percentile to the 56th percentile.
“This talent in this organization is unbelievable, so we just need to unleash it,” Napper said.
The board also heard from Chief Patient Experience Officer Heather Bulman, who presented an engagement agreement to be renewed between ECHD and Studer Group.
Studer Group works with healthcare organizations to improve clinical outcomes and financial results. Having worked with ECHD since 2015, the agreement entails leadership coaching and physician coaching targeting improved communication and patient experience, and has objectives of improving patient satisfaction and physician engagement.
“We believe that by achieving these objectives, this will synergistically lead to improved quality and safety of care, decreased average length of stay and achievement in financial goals,” Bulman said.
Bulman added that since 2015, ECHD has seen three hospital units move to the top quartile for the patient experience overall rating, and all other units have shown significant improvement. She said they have also seen more engagement among employees, and better interdepartmental communication and teamwork.
Napper added that he felt like Studer Group had previously been a false start beforehand due to low participation, and will require its use among hospital leaders from now on.
“Studer only works if every leader takes it as serious as it needs to be,” Napper said. “Any of the failures of the Studer Group is not a result of the Studer Group, it is a result of how we implemented it.”
The board passed the new agreement with Studer Group unanimously.