Standard & Poor's Affirms 'A'-plus Rating for Sutter Health
SACRAMENTO, Calif., Sept. 20, 2002 - The Standard & Poor's (S&P) credit rating agency has affirmed its single 'A+' rating for Sutter Health.
The strong credit rating helps ensure that the not-for-profit Sutter Health network of community-based health care providers will continue to have access to funds for facility upgrades, replacement of its hospitals and care centers, as well as new equipment purchases. In April, Sutter Health announced that it must invest $3.5 billion in outpatient, hospital and physician care center improvements over the next 15 years, including $600 million in state-mandated hospital seismic safety facility improvements.
The affirmation from Standard & Poor's comes at a time when many health care providers continue to face financial challenges, which have caused more than 100 California hospitals to close since 1990. During the same period, Sutter Health built or replaced more than a dozen hospitals and major care centers, improved regional access to physicians, introduced dozens of new services and expanded access to patients.
In its most recent report on the Sutter Health network, Standard & Poor's noted that "improved financial performance over the medium term will be needed in order for Sutter to fund its ongoing capital needs as well as its long-term strategic capital plan and still maintain credit quality."
"Stable financial performance and an accompanying strong credit rating are absolutely essential if we are going to keep pace with our local communities' health care needs," said Sutter Health President and CEO Van R. Johnson. "We must do whatever we can to be able to make these critical investments to further enhance the delivery of care throughout our network and improve access to care in Northern California," he said.
For 2001, Sutter Health announced that systemwide income from the day-to-day operations of its hospitals, physician care centers and other services was $53 million, compared to $30 million in 2000. Investment income of $48 million pushed Sutter's 2001 total income to $101 million, compared to $111 million in total income, including investment income, in 2000. As a not-for-profit, community-based organization, Sutter Health reinvests any earnings it achieves into the preservation and improvement of health care services, rather than rewarding private investors. It spent a record $417 million on services for the poor and underserved and on benefits for the broader community, up from $305 million in 2000.