Baptist Health upgraded to A+ by Fitch Ratings

January 14, 2022

Strong financial performance, and a robust strategic plan.

LOUISVILLE, KENTUCKY (Jan. 13, 2022) – Strong financial performance, and a robust strategic plan, buoyed Baptist Health’s recent upgrade to an A+ by Fitch Ratings.

Fitch Ratings announced the bond rating upgrade Jan. 7. The rating outlook was also revised from positive to stable.

“Baptist Health has proven that its steady growth is sustainable, which is reflected in this upgrade from Fitch,” said Gerard Colman, Baptist Health CEO. “The strategic investments that we’re making in our communities will continue to foster that kind of growth, and better serve our patients through projects that make our quality care more convenient.”

Among the positive points noted by Fitch are Baptist Health’s plans to spend on average about $380 million in each of the next four fiscal years to support major projects, including:

  • Baptist Health Hardin - 282,000-square-foot medical pavilion including comprehensive cancer care, surgical suites and physician offices.
  • Baptist Health Lexington -- 129-acre campus at Hamburg that includes an Ambulatory Surgery Center, Emergency Department, Cancer Center, and multi-story physician office complex.
  • Baptist Health Louisville -- 126,800-square-foot outpatient services healthplex on Breckenridge Lane plus an operating room expansion at the hospital.

“The system has targeted growth plans in areas that have high demographic growth, a strategy that is proven by increased utilization trends, even during the pandemic period,” the Fitch report stated. “Fitch expects that (Baptist Health) will use this broad operating platform, combined with strategic growth strategies, to generate strong future profitability.”

“Baptist Health has a disciplined planning process that integrates strategy and finance, resulting in a strong balance sheet and solid vision for the future,” said CFO Steve Oglesby. “This rating upgrade recognizes the effectiveness of this approach, and our ability to maintain a strong financial position even in the face of a pandemic.”

Rising revenue

Baptist Health has seen its operating revenue and income rise for the past four years, hitting $3.9 billion in operating revenue and $146 million in operating income for the last fiscal year which ended Aug. 31, 2021. The health system inked a 3.8 percent operating margin, up from 3 percent the previous fiscal year.

As outlined in the health system’s annual report, also released Jan. 7, factors contributing to the favorable financial results included hiring additional providers for the Baptist Health Medical Group, more patients receiving outpatient services and growth in neurosurgery, orthopedic surgery and cancer care.  The addition of Baptist Health Hardin, finalized at the start of the fiscal year, also boosted the bottom line.

Baptist Health saw double-digit growth last fiscal year in outpatient services (including surgery and Baptist Health Medical Group provider visits) and inpatient care including hospital admissions, births and emergency room visits.  

“There is a growing demand for the high quality care for which Baptist Health is known,” Oglesby said of the increases. “Our trends also indicate our ability to meet the increasing demand – to attract and retain healthcare providers, caregivers and support staff – which is a sign of a strong health system.”

To reward staff and promote retention, Baptist Health invested more than $100 million in additional programs, including “thank you” bonuses, more time off and premium wages. Baptist Health also increased its full-time equivalents (FTEs) by 3,426 which includes Baptist Health Hardin staff who joined the system in September 2020.

Caring for patients with COVID-19 increased costs for PPE, test kits, treatment and additional staffing which was buffered, in part, by CARES Act grants and other one-time revenue sources such as about $95 million from the Kentucky Medicaid Hospital Rate Improvement Program (HRIP). The program, designed to strengthen Medicaid and help hospitals provide needed medical care for thousands of low-income Kentuckians, was recently extended for a second year.