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Fitch Downgrades CNE as Lifespan Merger Talks Resume

Analysis  |  By Jack O'Brien  
   June 04, 2020

The ratings agency also changed the Providence-based health system's outlook to negative.

Fitch Ratings downgraded Care New England (CNE) from 'BB-' to 'BB' Thursday afternoon.

Fitch downgraded the system's revenue rating on a $131.1 million Rhode Island Health and Educational Building Corporation hospital financing bond as well as a $21.6 million Care New England taxable series 2016C bond.

The ratings agency also removed the Providence-based health system from Rating Watch Negative but downgraded the organization's outlook to negative.

Related: Two Hospital Finance Leaders on Replacing Consultants to Save Millions

The rating action came one day after WJAR reported that CNE and Lifespan Health System, another Providence-based provider, had resumed merger talks. 

Discussions for a consolidation, led by Rhode Island Governor Gina Raimondo, fell apart last year.

Related: Lifespan, Care New England Will Resume Merger Talks

In early April, Fitch placed CNE and 14 other nonprofit hospitals at Rating Watch Negative due to the ongoing spread of coronavirus disease 2019 (COVID-19).

Fitch stated that three main drivers for placing these health systems at Rating Watch Negative were weaker liquidity levels, weaker operating risks, and uncertainty about the effects of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the federal government's $2 trillion stimulus package.

Related: Due to COVID-19 Outbreak, Fitch Places 15 Hospitals on Rating Watch Negative

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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