The Dartmouth-Hitchcock Obligated Group, which comprises the Dartmouth-Hitchcock Medical Center and Dartmouth-Hitchcock Clinic, received an A+ rating on its newest $53.125 million bond issue earlier this month from Fitch Ratings, a New York financial ratings firm. The bonds, issued as part of DHOG's series for 2006, are expected to be priced this week, according to a Business Wire report.
Fitch also affirmed DHOG's $422.8 million of outstanding debt's A+ rating.
DHOG plans to use $33.8 million of the money raised by the bonds to refund a previous series of bonds it issued, $17.5 million will finance a new 117,690 square-foot surgery bed tower at Cooley Dickinson Hospital, and $1.8 million will pay for insurance on the bonds, Business Wire reported.
DHMC Vice President for Development Brian Lally said he was pleased with the bond rating.
"It's the same rating we had. It's the rating we were hoping for," he said.
Fitch cited DHMC's control of the Upper Valley healthcare market and the Medical Center's strong clinical reputation as primary factors in the A+ rating. The fact that the nearest extensive healthcare provider is over 100 miles away from the DHMC's main facility in Lebanon, N.H., also played a role in the rating. The Medical Center's nearest competitor, Fletcher Allen Health Care in Burlington, Vt., received a much lower BBB rating on its latest bond issue.
DHOG has several healthcare facilities under its control in Vermont and New Hampshire, as well as in Massachusetts. They include the Medical School's main teaching hospital, the Mary Hitchcock Memorial Hospital, Central Vermont Medical Center and Cooley Dickinson hospital in western Massachusetts.
Because DHMC does not possess its own investment company, DHMC issued the bonds through the Massachusetts Health and Educational Facilities Authority Revenue bonds.
The College itself also issues bonds to raise money, Associate Vice President for Fiscal Affairs Julie Dolan said. Dolan said the College issues its bonds through the state due to laws preventing institutions of higher education from directly issuing debt.
"The New Hampshire Healthcare and Education Facilities Authority issues the debt for us. It says Dartmouth College debt, but there is an intermediate conduit. It's for the College and the three professional schools," Dolan said.
The College last issued $101 million of bonds in 2002. Dolan said the latest issue went towards financing a variety of costs, including the new McLaughlin cluster and the Tuck Mall residence halls.
Despite the large amounts of money raised, Dolan said that the College tries to refrain from issuing debt when possible.
"There is a lot you have to go through to issue debt," she said. "Unfortunately you have to pay debt back. You have to pay back the money with interest, as opposed to getting a gift from somebody. It's not a good way to finance long-term operating costs. You typically only issue debt for large capital projects that have a long lifespan."
Dolan said she was happy with the College's current debt rating.
"[The bonds] have a triple-A rating. Our rating is the best you can get. We received that rating in the early to mid '90s," she said.
Dolan said it is necessary to closely monitor the College's finances with regard to debt.
"It's something you have to keep a pulse on all the time," she said.
