St. Vincent Health System Parent Company to Issue $1.5 Billion in Bonds

Catholic Health Initiatives of Englewood, Colo., a nonprofit health system that's the parent organization to St. Vincent Health System, said Thursday that it will issue about $1.5 billion in taxable bonds to finance an array of strategic initiatives.

The system said those initiatives include "virtual technologies, physician integration and partnerships and alliances in key areas across the country to strengthen local and regional networks of care." 

CHI said it is the largest bond issue in its history.

"The proceeds will allow this organization to truly fulfill its strategic goals to improve and expand health care in every community it serves," Dean Swindle, CHI's executive vice president for business services and chief financial officer, said in a news release. "It provides the flexibility we need to take advantage of future opportunities in a constantly changing health care environment."

CHI said this is the first time it has issued long-term, fixed-rate taxable bonds, which are offering interest rates at historically low levels.

"We consider this an essential investment in our future," Kevin Lofton, CHI's president and CEO, said. "This infusion of capital enables us to support the ambitious strategic plans we have developed to better serve our communities, improve the health of the people we serve, strengthen CHI through expanded capabilities, and continue our disciplined growth strategies."

CHI noted that issuing resulted in a downgrade of its credit ratings. Fitch Ratings took its rating from AA to Aa3, with stable outlook; Standard & Poor's, from AA to Aa3, with stable outlook; and Moody's Investors Service, from AA to Aa3, with stable outlook.

"We considered this downgrade a possibility," Swindle said. "It's part of dealing with a large issuance of debt in a difficult economy that is made even more volatile by the uncertainty over health reform. This is a fairly frequent occurrence for health systems over the last year or so.

"CHI still possesses a very strong rating from all three ratings agencies and solid prospects for the future."

Swindle said the bond issue will not affect CHI's financial outlook.

CHI operates in markets throughout the country including Tacoma-Seattle, Wash.; Omaha, Neb.; Des Moines, Iowa; Little Rock; and Chattanooga, Tenn. It also has operations in Kentucky, Nebraska and North Dakota.

CHI said part of the bond issue will help support the transition of Omaha-based Alegent- Creighton Health, once a joint-operating agreement partner of CHI and Immanuel, to full sponsorship by CHI.

That transaction is expected to close by Nov. 1.

The proceeds will also underwrite continued growth through mergers, acquisitions and joint ventures as CHI creates new partnerships. CHI recently signed a letter of intent with PeaceHealth, Vancouver, Wash., to create an integrated, 16-hospital network in Washington, Oregon and Alaska.

"This will help us accomplish what we have set out to do for the future - to create a clinically integrated health care system that is second-to-none in quality, efficiency and lower costs," Swindle said.