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STATEWIDE Triad Region

Baptist gets a fiscal

Wake Forest Baptist Health’s credit rating is under review for a downgrade by Moody’s Investors Service, underscoring the financial pressure facing hospitals as governments and insurers limit payments and patient stays. In the first nine months of its fiscal year, the Winston-Salem-based health system lost $116.7 million, writing off about $104 million of payments it couldn’t collect. “That shouldn’t happen, and as we saw, heads rolled,” says David Meyer, an industry consultant at Keystone Planning Group in Durham. He is referring to a management shuffle in which Chief Operating Officer Karen “Bobbi” Carbone replaced President Thomas Sibert, who held the job four years, and C. Michael Rutherford replaced Edward Chadwick as chief financial officer. In the fiscal year that ended June 30, 2013, the system lost $4.5 million, citing the cost of a new electronic records system. Other health systems face similar pressures — New York-based Moody’s has negative outlooks on Chapel Hill-based UNC Health Care and Raleigh-based WakeMed Health & Hospitals, where the cash-flow margin was about 7% last year, nearly a third lower than historic levels. Little improvement is likely the next five years, Meyer says. “Hospitals haven’t been as responsive as they need to be in reducing costs and changing the way they are doing things.” Wake Forest Baptist, which has cut about 1,000 jobs in two years, remains Winston-Salem’s largest employer, with more than 12,000 people on its payroll. Annual revenue totals about $1.9 billion. “The financial setbacks are fixable, and we are committed to restoring the medical center to improved levels of financial performance going forward,” Rutherford says. One thing that will help: San Antonio-based Kinetic Concepts agreed in July to pay the system $280 million through 2017 to settle a lawsuit over royalties for a wound-treatment device university researchers invented. “It’s manna from heaven,” Meyer says.

 

Largest North Carolina hospital systems ranked by credit ratings.

 

City Credit rating Outlook Last rating
Duke University Health System Durham Aa2 Stable November 2013
Carolinas HealthCare System Charlotte Aa3 Stable April 2013
Mission Health System Asheville Aa3 Stable August 2012
UNC Health Care System Chapel Hill Aa3 Negative March 2014
Cape Fear Valley Health System Fayetteville A3 Stable November 2012
New Hanover Regional Medical Center Wilmington A1 Stable June 2013
Novant Health Winston-Salem A1 Stable March 2013
Vidant Health Greenville A1 Stable October 2013
Wake Forest Baptist Health Winston-Salem A1 Under review June 2014
WakeMed Health & Hospitals Raleigh A1 Negative October 2013

 

Cone Health of Greensboro is not rated by Moody's

Source: Moody's Investors Service Inc.
 
 
 
Briefs

WINSTON-SALEMHanesbrands will acquire Paris-based DBApparel from Boca Raton, Fla.-based Sun Capital Partners for about $550 million. DBA makes intimate apparel, hosiery and underwear. The companies were owned by Chicago-based Sara Lee until 2006, when Sun Capital bought DBA and Hanesbrands became a public company. About 3,200 of Hanesbrands’ 49,700 workers are in North Carolina.

HIGH POINTBNC Bancorp agreed to acquire Charleston, S.C.-based Harbor Bank Group, holding company for Harbor National Bank, for about $50.6 million. Harbor has four branches in South Carolina and assets of about $306 million. After the deal closes in the fourth quarter, BNC, parent of Bank of North Carolina, will have about $4 billion of assets and 52 branches (cover story, June).

GREENSBORO — Marsh & McLennan Agency, a subsidiary of New York-based Marsh, acquired Senn Dunn Insurance, the state’s largest independent insurance agency, for an undisclosed amount. Marsh will retain the five Senn Dunn offices in Greensboro, Charlotte, High Point, Raleigh and Wilmington and the company’s 155 employees. Senn Dunn was founded in 1927.

GREENSBORO — Mickey Foster was named president of 536-bed The Moses H. Cone Memorial Hospital and executive vice president of Cone Health in June. He was president of Reidsville’s 110-bed Annie Penn Medical Center, a member of Cone Health, since May 2010 and previously served as chief operating officer of 102-bed Maria Parham Medical Center in Henderson. Foster replaces Judy Schanel, who became executive vice president of acute-care services.