Roper St. Francis Healthcare's new hospital in Berkeley County is more than the fruition of a dozen years of planning and waiting. It also could be just what the doctor ordered for the system's finances.
Analysts with Moody's Investor's Service have said they are confident Roper's new Berkeley Hospital, scheduled to open in October, will be a positive for the nonprofit medical provider.
Roper could use a boost. In 2018, Moody's downgraded the system one notch to Baa1, reflecting moderate credit risk. The financial services firm — the only one that rates Roper's debt — reaffirmed that rating in a credit opinion in late June.
"As the Lowcountry’s only investment-grade rated health system, we value our rating and are pleased it was affirmed," said Bret Johnson, chief financial officer for Roper St. Francis Healthcare, in a statement when the opinion was released. "The rating recognizes positive trends in our margins during a challenging earnings environment for health care systems."
The health care company has had strong performance recently, Moody's wrote, but some longstanding issues have weighed down on the system's bottom line.
The health care company reported an $8.9 million loss in 2018 , almost entirely due to losses on investments. Revenue from caring for patients was up about $2 million, or 2%.
A reward might come with the Berkeley Hospital.
Roper will be the first to open a full-service hospital in the area, where the population base has been expanding rapidly. Today, the system runs three hospitals, one each on the peninsula, West Ashley and Mount Pleasant. It opened the Mount Pleasant hospital in 2010.
Roper holds 35% of the market share among area hospitals, and the Berkeley Hospital could increase that, according to Moody's. With about 5,600 employees and growing, Roper is one of the largest private employers in the region.
Dan Steingart, a Moody's analyst, said Roper's finances are not in tip-top shape, but added that many hospital systems like it are also experiencing hard times.
By one important measure, Roper St. Francis is under-performing. The hospital system has enough cash to keep running for only 92 days if it suddenly stopped making money, according to the report.
Steingart said even hospitals with worse credit ratings typically have 100 days of cash on hand or more, and Roper St. Francis' metric is "very low by any measure."
If Roper's numbers fell below a certain threshold, its owners would be required to contribute money to bail it out. The system's owners include the Medical Society of South Carolina, which owns a majority stake, along with Charlotte-based Atrium Health and Bon Secours Mercy Health.
The credit score also was attributed in part to a tough operating environment for nonprofit hospitals like Roper. These kinds of hospitals' revenue had been falling since 2016, Moody's analysts wrote in an April report, but in 2018 began to bounce back.
Fewer patients are staying in hospitals overnight. And more people are aging into the government-funded Medicare system, resulting in lower payments for hospital services. The high number of uninsured South Carolinians also is a financial burden.
Steingart said nonprofit hospitals nationwide will likely continue to face the same challenges.
"Unfortunately, I think this is going to be the case for the foreseeable future," he said.