Staff Report
Published July 25, 2012

Fitch Ratings has affirmed its BBB+ rating on about $21 million worth of revenue bonds taken out by KershawHealth to finance hospital facilities in Camden.

The agency said the rating outlook is stable, and cited the hospital’s favorable revenue trends and 54.6% market share.

The rating covers about $19.6 million series 2008 South Carolina Jobs-Economic Development Authority hospital facilities revenue bonds, and $1.45 million series 2002 Kershaw County hospital facilities revenue bonds.

Fitch noted that the hospital increased its profit margin to 1.4% on total operating revenues of $130 million in fiscal 2011, and decreased its debt.

Another plus is Kershaw's collaborative agreement with Palmetto Health, which was signed in May 2011, Fitch said.

Kershaw outsourced its lab services to Columbia-based Palmetto Health in March and expects to realize annual savings of about $700,000, Fitch said. Management is currently in discussions regarding other potential areas of mutually beneficial collaboration, Fitch said.

Credit concerns include a high exposure to government payers. With 67.2% of gross revenue derived from Medicare and Medicaid payments in fiscal 2011, state and federal budget cuts could impact hospital profits, Fitch said. The service noted that Medicaid reimbursement rates to KershawHealth were cut by 7% last year.

KershawHealth operates the only acute care hospital in Kershaw County. Its Camden hospital is licensed for 121 acute care beds and 96 long-term beds. It has 76 physicians on its staff.

Fitch is a global rating agency that provides independent and prospective credit opinions, research and data.