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Moody's revises Peninsula Regional Medical Center's (MD) outlook to negative; affirms A2.

New York: Summary Rating Rationale

Moody's Investors Service affirms the A2 rating assigned to Peninsula Regional Medical Center, MD (PRMC). The rating outlook has been revised to negative from stable. The rating action affects approximately $126 million of rated debt issued through Maryland Health and Higher Education Facilities Authority.

The revised outlook to negative from stable reflects our expectation that operating performance will be negatively impacted in the coming years as the system implements a costly IT transformation project and works to build a new clinical staffing strategy. Affirmation of the A2 rating reflects PRMC's strong market position, continued liquidity growth, and the benefits of Maryland's strict Certificate of Need (CON) and regulated rate setting environment. These strengths are offset by PRMC's relative size of operations and anemic revenue growth, significant capital spend in the coming years and continued pressure on the hospitalist program.

Rating Outlook

The negative outlook reflects an expectation that operating performance will be constrained in the coming years as the system implements a new EMR system and revises clinical staffing levels and works to reduce the need for temporary staffing.

Factors that Could Lead to an Upgrade

Significant enterprise growth leading to more stable operating margins commensurate with A1 medians

Maintenance of strong market share and reduction of temporary staffing costs

Continued liquidity growth in line with peers

Factors that Could Lead to a Downgrade

Significant decline in financial performance outside of current expectations

Significant decline in debt coverage ratios or measurably higher leverage

Loss of market share or volumes that translates into declining global budget revenue

Legal Security

All bonds are a general obligation secured by a pledge of revenues from the obligated group, of which PRMC is the only member.

Use of Proceeds

Not Applicable

Obligor Profile

Peninsula Regional Medical Center is a tertiary care hospital and trauma center located in Salisbury, MD. The system benefits from sole community provider status and trauma center designation by the State of Maryland for the Eastern Shore Region. Specialized services include Heart and Cancer institutes.


The principal methodology used in this rating was Not-For-Profit Healthcare Rating Methodology published in November 2015.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:Mar 11, 2016
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