One month after Baylor Scott & White Health merged to create the largest not-for-profit system in the state, Moody’s Investors Services has downgraded the financial outlook for the newly created company.
In separate reports, Moody’s revised the outlook on both Baylor Health Care System and Scott & White to negative, Modern Healthcare reports. For Scott & White, the reason for the negative outlook includes new hospital construction, a “very weak” operating cash-flow margin compared to others, and flat volume. For Baylor, the Moody’s report cites the execution risk of improving the balance sheet of Scott & White.
“Our continued expansion is critical as we work to meet the needs of the growing communities we serve through our population health model,” Scott & White president and CEO Dr. Robert Pryor said in a statement to Modern Healthcare. “While our recent combination with Baylor Health Care System will increase the strength of both organizations, integration takes time.”
Baylor Scott & White CEO Joel Allison echoed Pryor’s sentiments.
“While the combination will ultimately further enhance over time the financial position and operating performance of both organizations, there are typical execution risks associated with a deal of this magnitude in an immediate sense,” he said. “The board and management of the new parent, Baylor Scott & White Health, are focused on a successful and timely integration to continue to provide safe, quality, compassionate health care to the growing number communities we serve.”