Renown Health today received a negative rating outlook, down from a previous rating of “stable,” according to Fitch Ratings, which reports on company credit ratings.
The company maintained Renown at an “A+” rating for issuer defaults. The ratings come days after hospital insiders said Renown was not forthcoming about its financial condition. As first reported by This Is Reno, the hospital is facing $110 million in losses.
The hospital cited labor shortages and increased expenses for the losses. Fitch analyst Kevin Holloran told This Is Reno Renown is not alone. Larger hospitals across the country are still reeling from the impacts of the pandemic – primarily from costs associated with COVID-19 and persistent labor issues.
“When … COVID is in the area, whether it’s in your house, or in your neighborhood, or your community, not only is it sending … heavy COVID … medical volumes to the hospital, it sickens staff,” Holloran said. “The staff themselves have got to stay home and take care of their, their own families so to speak, and so basically your contract labor expenses just shoot through the roof. So, revenues down, expenses up.”
The Fitch report indicates “operational weakness in the ‘21 fiscal year, which accelerated in fiscal 2022 … largely due to heightened labor costs the result of coronavirus volumes in both the hospital and the community.”
Holloran said population trends contribute to Renown’s ratings and could continue for the next five years.
“What we did is we affirmed the existing ratings,” he said. “This rating is an A-plus – it was stable – and after this most recent fiscal year’s operational losses and looking forward, we decided to revise the outlook to negative from stable. Negative in real loose parlance is roughly like a one-in-three to one-in-two chance of seeing rating movement downward.”
He said the past fiscal year was rough on similarly sized hospitals.
Renown did not respond to a request for comment by the time of publication.
It continues to emphasize it is in a positive position even though its finances and issues with former CEO Tony Slonim’s leadership were being investigated starting in 2021.
After Slonim’s firing in March, Renown’s board chair Adam Kramer said he was pleased with where the hospital was going.
“I’m really proud at where the system as a whole is heading,” he said. “Renown Health is in a phenomenal position.”
Kramer, just before the board fired Slonim, also praised Slonim’s leadership.
“The fact that Renown and Tony are being recognized on a national level as “best in class,” alongside leaders from Mayo, Cleveland Clinic, Mass General, Stanford, Google, CMS, Kaiser Permanente and other national leaders demonstrates just how far Renown has come as an organization,” Kramer wrote in a statement published in the Northern Nevada Business Weekly.
Four weeks later, Slonim was fired “with cause.”