Legacy Health Is in Good Financial Health, Contrary to Claims Made to Justify OHSU Deal

Legacy Health drew attention April 14 to the fact that S&P Global Ratings, a company that rates the quality of corporate bonds, had affirmed the hospital system’s “A” rating with a “stable” outlook.

The investment-grade rating, S&P’s third highest, “confirms our continued progress toward financial sustainability,” Legacy said on its website.

S&P’s opinion on Legacy’s creditworthiness undermines a key reason given by Oregon Health & Science University for its proposed purchase of Legacy.

“Simply put, Legacy Health must find a strategic partner to achieve financial sustainability,” OHSU said in a regulatory filing in September.

Legacy isn’t required to disclose bond ratings, according to a person familiar with the matter. Legacy’s press office didn’t return an email seeking comment on why it chose to publicize this one.

S&P last rated Legacy in November 2023. Since then, salaries and other costs have risen “substantially,” Legacy said.

“Despite that economic challenge, Legacy is seeing sustained, improved performance thanks to comprehensive efforts across our organization,” Legacy said.

Legacy has a “strong enterprise profile, underlined by the system’s sizable primary service area, sound economic fundamentals, and a relatively stable business position,” S&P said in its report.

The vote of confidence follows a similar one from Moody’s, another ratings agency, Legacy said. Together, the opinions show “our continued progress toward financial sustainability,” Legacy said.

An OHSU spokeswoman declined to comment on why Legacy may have publicized S&P’s report and highlighted the most positive parts. The spokeswoman did, however, point to passages in the report indicating that S&P’s rationale relied in part on OHSU’s proposed purchase.

Two that she pointed out were:

“The rating reflects our view of Legacy’s strong enterprise profile, underlined by the system’s sizable primary service area (PSA), sound economic fundamentals, and a relatively stable business position that is further anchored by various strategic investments and partnerships, including the binding definitive agreement with Oregon Health and Science University.”

And:

“Effective May 30, 2024, Legacy signed a definitive agreement with OHSU (rated A+/stable) to become a wholly owned subsidiary of OHSU. The transaction remains subject to regulatory approval and is currently under review by the State of Oregon’s Healthcare Marketplace Oversight Program. Should the transaction close, it is possible that Legacy’s debt could be defeased.”

Legacy’s press office didn’t return an email seeking comment.