WHIDBEY ISLAND: Hospital bond to improve credit
Jessie Stensland reports from the Whidbey Island Public Hospital District board meeting of Thu., Feb. 27, 2025 for the Whidbey News-Times. Read the whole story.
WhidbeyHealth has access to an extra $10 million in credit, but hospital leaders have no plans to ever use the funds.
On Thursday, the elected members of the hospital district board adopted a resolution to authorize issuance of a limited tax general obligation and revenue bond in an amount not to exceed $10 million from Coastal Community Bank for the purpose of paying operating and capital expenses. CFO Paul Rogers said the bond is also considered a taxable revolving line of credit.
In March 2024, Moody’s Ratings again downgraded WhidbeyHealth’s credit rating deeper into junk bond territory and placed the district on review for further downgrade, reflecting what the credit agency called “severe and immediate liquidity challenges.”
In a related resolution, the hospital board also voted to allow the hospital to transfer its banking — accounts payable, payroll, checking and depository account — from Heritage Bank to Coastal Community Bank.
They Said It
In an interview, Rogers explained that the bond is needed to help shore up the hospital district’s credit rating, and he doesn’t anticipate that the hospital will ever need to access any of the funds.
Hospital officials at the time reassured the community that the ratings action made the district’s finances seem more dire than reality. CEO Nathan Staggs explained at the time that the hospital’s liquidity challenges were due to one-time several factors, including the cost of a new electronic records system.
Rogers said WhidbeyHealth currently has 10 days of cash on hand, which is expected to increase to 23 days by the middle of July.
Rogers said that he realized while working with Moody’s that having access to an extra $10 million would improve the district’s credit rating. The ratings agency is due to reconsider the hospital’s credit risk again within the next month. Perhaps more importantly, the access to credit would give the hospital leaders options in case of an emergency.
Board member Marion Jouas emphasized that hospital leaders appreciated all the support that Heritage Bank has offered over the many years.
