The Antelope Valley Hospital District, owner of Antelope Valley Hospital in Lancaster, has refinanced its debt with a fixed-rate, long-term public bond issue that eliminated a $55 million balloon payment that was due in September of next year. The district’s new bonds, totaling $140 million, will reach final maturity in 2046 with a net interest of less than 5 percent without credit enhancement. “We caught the market at one of the best rates we have seen in the past two years, so it was really fortunate we went to the public when we did,” Paul Brydon, chief financial officer for the hospital, told the Business Journal. Prior to the issue, the district had five separate bond issues with maturities stretching from next year to 25 years from now. Amortization was around $12.1 million a year. With the new consolidated debt, current amortization is down to $8.2 million a year. However, the new bond issue tacked on an additional five years of interest before final maturity. According to a February report on the refinancing, bond credit agency Moody’s affirmed the district’s junk bond rating of “Ba3” with a negative outlook. Reasons cited for the rating were high turnover in senior management, partially attributed to a difficult working relationship with the district’s board, as well as a relatively weak and unstable operating performance. The report also notes that if the hospital district continues to maintain its current levels of performance while improving its financial liquidity, the agency anticipates stabilizing its outlook in future reports. “Over the last three months of performance, we have had positive bottom lines, which is the first time in memory we’ve been able to do that,” said John Rossfeld, chief executive of Antelope Valley Hospital. Rossfeld joined the senior management team at AVHD earlier this year and was appointed by Alecto Healthcare Services of Irvine, the management company that has supervised the hospital district since November. With management in place, the district is now focusing on generating revenue, lowering costs and improving operations. In addition to refinancing its debt, the district took an extra $10.2 million in the bond issue for seismic retrofitting of its facilities, which it estimates will cost approximately $8 million. In addition, the district might implement a new medical record system, which should improve long-term operations. “If we continue showing a strong bottom line, improved cash flow and removal of that bullet debt, I think it is looking good for us with Moody’s,” said Brydon. The district is a public entity that is similar to a school district. Providence CEO Erik Wexler has been named senior vice president and chief executive of Catholic nonprofit Providence Health & Services’ Southern California region. In his new position, which will begin May 2, Wexler will oversee an area that consists of six hospitals — including Providence Holy Cross Medical Center in Mission Hills, Providence St. Joseph Medical Center in Burbank and Providence Tarzana Medical Center — along with several outpatient centers and programs, two physician groups and Providence High School in Burbank. The health system’s SoCal region retains around 13,000 employees and more than 4,000 physicians. As chief executive, Wexler will personally work with St. Joseph Health of Orange County as the two entities plan on merging in the future. Until May, Wexler will continue in his current job as chief executive of Tenet Healthcare’s northeast region. He has worked for Dallas-based Tenet for five years with his most recent position running operations in Illinois, Massachusetts and Pennsylvania. The region includes two academic medical centers, two teaching hospitals, five acute care hospitals, two health plans and 16 residency programs, which bring in $2.2 billion in net revenue annually. Wexler was recruited by a selection committee led by Mike Butler, president of operations and services for Providence in Renton, Wash., where the organization is headquartered. The committee interviewed applicants from all over the United States before deciding on Wexler. “Though we had many excellent candidates, Erik was the clear choice because of his experience serving large, diverse and dynamic communities and leading organizations toward the future of health care,” Butler said in a prepared statement. “He also is known for building strong relationships with employees, physicians, the community and other key audiences.” Providence Health & Service, with more than 82,000 employees, is the third-largest nonprofit health system in the United States. Staff Reporter Stephanie Henkel can be reached at (818) 316-3130 or [email protected].
