Atlantic Health System gets Credit Rating Upgrade, Positive Outlook

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Atlantic Health System in New Jersey recently received improved rating actions from Standard & Poor’s (S&P) and Moody’s, making it the highest rated system based in the state by both agencies.

“The reports from S&P and Moody’s not only recognize the work we have done, but put us in a stronger position to continue to improve patient care.” - Kevin Lenahan, CFO, Atlantic Health System

Atlantic Health System, a leading health care delivery system in New Jersey, recently received improved rating actions from its two credit rating agencies – a rating upgrade from Standard & Poor’s (S&P) and a positive outlook from Moody’s – making it the highest rated system based in the state by both agencies.

S&P upgraded Atlantic Health System one notch from “A+” to “AA-“, due to the continued growth and diversity at the organization. The report from the agency noted the additions of Newton Medical Center in 2011, Chilton Medical Center in 2014, and Hackettstown Medical Center in April of this year have helped Atlantic Health System expand its overall service area and support its growth. In addition, Atlantic Medical Group, a network of more than 600 system-affiliated physicians, has grown rapidly.

S&P also highlighted the organization’s leading market position and locations in demographically favorable service areas throughout northern New Jersey. In addition the system has accelerated financial earnings, maintains a stable balance sheet and operates with a management team with the appropriate structure and skillset, S&P reported. Its outlook with S&P remained stable.

Moody’s, which affirmed the health system’s previous rating of A1, improved Atlantic Health System’s outlook from “stable” to “positive,” due to expectations that the organization will continue to perform strongly and will maintain its good financial management. Moody’s noted that its affirmation of the A1 rating reflected Atlantic Health System’s favorable market position, strong revenue growth and maintenance of balance sheet and leverage metrics, despite the economic and budgetary pressures affecting organizations within New Jersey.

The ratings actions by both agencies place Atlantic Health System as the highest rated New Jersey based system rated by S&P and Moody’s. This puts the system in a favorable position to leverage its credit strength and allows the system to issue or refinance its debt at more favorable interest rates. Atlantic Health System may pay less on interest on its bonds and allow the organization to invest more of its money in patient care initiatives, including technology, skilled staff and infrastructure.

“Through careful financial management and wise growth throughout the region, we have developed a strong foundation for Atlantic Health System to thrive and create a Trusted Network of Caring that will allow us to fulfill the health care needs of our communities,” said Kevin Lenahan, senior vice president and Chief Financial and Administrative Officer for Atlantic Health System. “The reports from S&P and Moody’s not only recognize the work we have done, but put us in a stronger position to continue to improve patient care.”

The credit agencies noted the following among the reasons for Atlantic Health System’s enviable ratings and outlook:

  • Atlantic Health System is a large multi-site organization with more than $2 billion in revenues and 100,000 total admissions (including observation stays and admissions)
  • The incorporation of Chilton, Newton, and Hackettstown into the system, as well as the Mid Jersey Health Alliance with Hunterdon Healthcare System, which coordinates care and offers expanded clinical services in Hunterdon, Somerset, Mercer, and Warren counties have helped Atlantic Health System expand its overall service area
  • The rapid growth and increased integration of Atlantic Medical Group
  • Continued growth in operating margins, cash measures and debt leverage measures
  • The addition of Brian Gragnolati, who took the reins as CEO in 2015, as well as new additions to the management team of Atlantic Health System. S&P noted, “We view the new management team and CEO, who came from Johns Hopkins, as having appropriate skillsets for this organization, especially since it has added new executives with population health skills”

Among other successes reported to the credit agencies has been the performance of the two accountable care organizations (ACOs) affiliated with Atlantic Health System – Atlantic ACO and Optimus Healthcare Partners. Both ACOs produced shared savings for Medicare in 2015.

About Atlantic Health System

Atlantic Health System, headquartered in Morristown, New Jersey, is a leading non-profit health care delivery system in New Jersey. Our network includes Morristown Medical Center in Morristown, NJ; Overlook Medical Center in Summit, NJ; Newton Medical Center in Newton, NJ; Chilton Medical Center in Pompton Plains, NJ; Hackettstown Medical Center in Hackettstown, NJ; and Goryeb Children’s Hospital in Morristown, NJ, as well as Atlantic Rehabilitation, and Atlantic Home Care and Hospice. It also includes its subsidiary, Atlantic Ambulance Corporation. Atlantic Health System comprises 1,747 licensed beds, more than 14,000 employees and more than 4,000 physicians. Atlantic Health System has a medical school affiliation with the Sidney Kimmel Medical College at Thomas Jefferson University; is part of Atlantic Accountable Care Organization, one of the largest ACOs in the nation, and is a member of AllSpire Health Partners.

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Rob Seman, Public Relations Manager, Atlantic Health System
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