The downgrade to Ba1 reflects Northern Hospital District of Surry County's (NHSC) material decline in operating performance in fiscal 2022, resulting in negative operating cash flow and our expectation that financial performance will remain weak in 2023. We expect that the organization's debt service coverage will be thin this year and next. Weak operating performance is attributable to elevated expense pressures resulting from an electronic record implementation, labor shortages, and inflation.
The 'A-' rating reflects PHH's leading inpatient market share and normally sound operating performance. Operating results are expected to improve over the medium term, as PHH continues to implement its growth and efficiency strategies across the system, which includes the recent acquisition of Highlands Hospital in Connellsville and the opening of a micro hospital in State College in 2024.
Folx Health, which offers virtual healthcare services for the LGBTQ+ community, raised $30 million in a Series B funding round led by 7wireVentures. The investment will also go toward scaling Folx's new employer offering, building customer support teams and working toward accepting insurance coverage.
Robert K. Kraft and the Kraft Family Foundation have donated $50 million to Massachusetts General Hospital to address health care disparities caused by race, ethnicity, geography, and economic status.
Grants, loans, and other assistance intended to help hospitals and doctors remain solvent went disproportionately to wealthy hospitals that did not need the money as urgently as independent practices and struggling rural hospitals did.
Fitch expects profitability to recede in fiscal 2022 as children's hospitals have not been immune to the staffing shortages pressuring the overall healthcare industry. With labor challenges likely to persist, children's hospitals are expected to implement base rate increases, bonus incentives and additional benefits similar to their adult counterparts to recruit and retain staff, ultimately compressing profitability metrics.