A major bond rating agency has upgraded its assessment of Chattanooga’s biggest hospital even though it estimates the hospital’s pending change to a nonprofit governance model next year could reduce some government aid by up to $10 million a year.
Fitch Ratings is upgrading its bond rating for Erlanger Health System after the hospital improved its operations and cut some expenses since reporting a $4.4 million loss in fiscal 2019. In a new Fitch analysis of Erlanger, the bond rating service said the hospital has boosted revenues by nearly 20% over the past five years while growing expenses by 16.5% in the same period, boosting its bottom line.
“The improved operating profile, which began under the management action plan in 2019, has been maintained through fiscal 2022…focused on expense reduction and productivity enhancements,” Fitch said in a new assessment that boosted Erlanger’s bond rating from BBB to BBB+.
Fitch Ratings said Erlanger enjoys a leading share of the growing Chattanooga health care market and said Erlanger is well positioned as a regional referral center for treating the most acute care needs of the region. Fitch estimates Erlanger has a 44.7% market share of the hospital business within the 150-mile radius of Chattanooga covered by its large ambulance air service, or about twice the market share of CHI Memorial or HCA Parkridge hospital.