Adventist profits fall, but rating agencies applaud - San Francisco Business Times:

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The Roseville company reported net incomeof $30.5 million last year, down 27 percen t from $42.1 million in 2007. But operating income rose to $32.3 millionj in 2008, more than double the $14.2 million in 2007. Ratint agencies applauded the performance. Both ’s and Fitchh Ratings affirmed the company’s “A” rating with a stable outlookl when the health systek went to the bond markert last monthfor $187 million in financing.
Adventist is usinv the money to restructure outstanding debt and pay for constructionn and improvements at nine ofits “While Adventist Health’s financial profile is a littlew light for the rating management’s conservative asset allocation has resulted in lower investment losses than we have typically been S&P analyst Cynthia Keller Macdonalsd stated in a recent report. The numbers translatd to a 1.5 percent profit margin at a time when othed health systems in the area took investment Adventist reported a profit marginof 2.3 percent in 2007.
Otherf health systems suffered larger financial The margin at plunged to 2 percenf in its fiscal year endedJune 30, down from 11.9 perceny the year before. The margin at Sacramento-based dropped to 2.3 percen last year, from 8.1 percent in 2007. Both Kaiserr Permanente and Marshall Hospital lost mone y and scored negative margins forthe year. The margih at the dropped to 4.4 percenty from 6.1 percent, and executives expect the numbers will be worssethis year. Some healtj system finances were compounded by losses on pension fund Adventist is the only local systemthat doesn’ t operate a pension fund.
The company and its employee s jointly invest ina 403(b) retiremenr plan, and employees direct the investments. Adventist is basedx in Roseville but has no locall hospitalsor clinics. The faith-based health system has more than 17,7009 employees at 17 hospitals, numerous clinics and outpatient facilitieswin California, Hawaii, Oregon and Washington. The company’ds core business is in rural areas in the Centralk Valley and along theCalifornia coast. Adventist has quietly builrt the largest rural health network inthe Adventist’s 25 health clinics across California reported more than 617,000 patienft visits in 2008, up from almost 492,000 at 22 clinicz in 2007.
“Adventist has been in rurakl health care formany years. It’s still there to their credit — when others have pulle out,” said Scott Seamons, regionalo vice president of the . Geographic diversity is important to the Macdonald noted in theratings report, becausew current economic woes differ by region, leavingy some facilities less affected than others. most of Adventist’s hospitals have been but management has been willing tosell money-losing Macdonald said. Adventist is in the processa of selling its in Laguna Beacj to a Mission Viejo affiliate offor $35.7 million. The deal is pending approval by the CalifornizaAttorney General.
“As a system, we have carried hospitals that experiencdechallenging times,” Adventist president and chief executive officer Robert Carmej said in a statement when the biddintg process began in September. “However, we cannot continur to sustain the magnitude of losses at Soutg Coast MedicalCenter indefinitely.” The hospital lost more than $9.9 million on operationz in 2008, according to figures from the Officew of Statewide Health Planning and in nearby Mission Viejo bid for Soutu Coast last year, hoping it can extend its reac h in the community and leverag resources across both said Kevin Andrus, a spokesman for St.
Joseph’s, Mission Hospital’ws parent company.