Cheyenne Regional Medical Center, WY Hospital Revenue Bond Outlook Revised To Positive On Service Agreement

CENTENNIAL (S&P Global Ratings) Feb. 1, 2019--S&P Global Ratings revised its 
outlook to positive from stable and affirmed its 'A' long-term rating on 
Laramie County, Wyo.'s series 2012 hospital revenue bonds, issued on behalf of 
Cheyenne Regional Medical Center (CRMC). 

"The positive outlook reflects CRMC's executed six-year management services 
agreement with the University of Colorado Health," said S&P Global Ratings 
credit analyst Wendy Towber. "This agreement affords CRMC access to--and the 
benefits of--the University of Colorado Health's management expertise as well 
as economies of scale, medical staff collaboration and recruitment, quality 
assurance efforts, and strategic planning capabilities all of which serve to 
strengthen CRMC's overall economic profile in our view," Ms. Towber. 

More specifically, credit strengths include our view of CRMC's:
  • Sound year-to-date financial performance supporting a trend of improving operating margins and contributing to good MADS coverage that is consistently stronger than current rating median levels;
  • Solid business position with exceptional market share, good payor mix, and MSA (executed February 2018) with UCHealth providing CRMC benefits through access to UCHealth's management expertise as well as economies of scale and better strategic capabilities;
  • Healthy and steadily growing unrestricted reserves on both a nominal basis and relative to operations and debt; and
  • Healthy and conservative debt profile with light leverage, no contingent liabilities and no plans for additional new debt.
Partly offsetting credit risks include our view of the organization's:
  • Limited primary service area (PSA) population and very thin economic fundamentals, somewhat moderated by the economically stabilizing presence of the state capitol;
  • Flat hospital revenue and medical group losses; and
  • Elevated capital spending expected within the outlook period, although we view the capital budget as manageable and believe it will stabilize the steadily increasing average age of plant.
Laramie County has a population of about 100,000 residents. Wyoming is the 
least populous state in the country but covers a broad geography, resulting in 
low population density. The hospital has a strong complement of specialties in 
our view with a medical staff that currently includes 180 physicians, 
including 89 employed physicians, who account for over 70% of inpatient 
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