Providence rating downgraded due to ongoing operational problems

Fitch Ratings reported March 17 that Providence’s operating loss in Renton, Washington, which posted a $1.7 billion operating loss in fiscal 2022, was downgraded as the 51-hospital system continues to address ongoing operational challenges.

The downgrade to ‘A’ from ‘A+’ applies to both the system’s default rating and about $7.4 billion in debt.

While Providence is expected to regain its cash flow margins in the coming years, it will have to face ongoing pressure to discipline itself through a number of cost-cutting initiatives the system has launched under its Recover and Renew program, Fitch notes.

The outlook for Fitch is negative as Providence’s leverage is above average and amid concerns that the system may not meet FY23 operating targets.

Providence generates approximately $26.4 billion in annual revenue and employs 107,000 people.

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