Fitch ratings: High physician affiliation will aid WellSpan

The high numbers of physicians affiliated with WellSpan Health will help the York Township-based system navigate health care reforms successfully, according to a new assessment from Fitch Ratings.

Fitch said 766 physicians — more than 75 percent of those in the hospital’s market — are affiliated with WellSpan, which Fitch counted as a key credit strength. However, Fitch noted that WellSpan’s physician group, which employs 411 of those doctors, generated losses of $19.6 million in 2011 and $21.4 million in 2012.
Other strengths Fitch listed were market share and operating profitability.
WellSpan’s 2011 market share was 59 percent for inpatient, up from 56 percent in 2010, and 42 percent for ambulatory surgery procedures, compared with 10 and 12 percent respectively for its top competitor, Hanover Hospital.
WellSpan’s operating margin, historically about 3 percent, climbed from 1.6 percent in 2010 to 2.4 percent in 2011 to 4.2 percent in 2012. For 2013, the operating margin is projected to be about 3.3 percent.
On the negative side, Fitch noted that WellSpan had long-term debt totaling $430.8 million as of Sept. 30, 2012, and that its defined benefit plan, which was partially frozen in 2007, was only 61 funded by June 30, 2012, which necessitated a contribution of $41 million in the first quarter of fiscal year 2013.
Fitch affirmed WellSpan’s revenue bonds at their AA rating and classed its outlook as stable.
WellSpan consists of York Hospital, Gettysburg Hospital, Surgical & Rehab hospital, 34 ambulatory and outpatient care locations and various other health-care-related entities.

Heather Stauffer

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