...S&P Global Ratings lowered its long-term rating on Montgomery County Higher Education & Health Authority, Pa.'s revenue bonds, issued for Holy Redeemer Health System (HRHS), to '###' from '###+'. The outlook is stable. The downgrade reflects weaker-than-expected operating performance in fiscal 2017 with continued deterioration through first-quarter fiscal 2018 (ended Sept. 30 2017). This resulted in margins and coverage that are weak for the rating. We understand that the weak operating performance is attributable to a greater shift to observation visits and reimbursement pressure in the hospital's home health business. While we expect HRHS to continue to face operating challenges, we understand management has implemented a robust revenue enhancement and cost-saving plan as part of its mitigation strategy to achieve break-even results by 2019. However, we believe this could be challenging due to the current industry stress. Additional risks include a competitive operating environment, in...
