A credit rating agency lowered its scores for Bangor’s largest health care system this week due to its ongoing financial losses.
Moody’s Ratings knocked its rating for Northern Light Health down from Ba2 to Ba3, and the score is under review for a further downgrade, according to a statement from the agency.
The credit agency attributed the dip to the provider’s “inability to stabilize liquidity, use of short-term bank lines, and ongoing cash flow losses,” according to Moody’s statement on the rating drop. Northern Light also had roughly $620 million of outstanding debt as of Sept. 30, the agency said.
The downgrade is the latest blow for Northern Light Health, which has had to scale back services in some facilities that provide care to the state’s most rural communities due to its financial losses. That deficit was largely inflicted by pandemic-era complications like staffing shortages and supply chain disruptions.
Despite this, Brewer-based Northern Light Health still boasts 10 hospitals and more than 120 locations in seven of Maine’s 16 counties, making it one of the state’s largest employers.
The score change means Northern Light may pay more interest on loans in the future, which would increase capital costs of future investments.
The new rating, issued on Oct. 8, came roughly six months after the agency lowered its rating for Northern Light Health from Ba1 to Ba2 for the same reason.
Suzanne Spruce, a spokesperson for Northern Light Health, said the downgrade wasn’t a shock to the provider “given current conditions in the healthcare marketplace.”
“As in other industries, the costs of goods, services, and labor continue to rise; while at the same time reimbursement for healthcare services has stagnated — and even decreased,” Spruce said.
Despite the rating downgrade, Spruce said Northern Light has found ways to expand access and reduce costs, but the provider still has a long way to go.
“The ongoing challenges facing the healthcare industry overall require critical changes to how we deliver care and manage our system to ensure quality healthcare is available to Maine people today and in the future,” Spruce said.
While Moody’s acknowledged Northern Light cares for people across the state and has limited competition, the agency said its “operating performance remains poor” and shows little signs of improvement in early fiscal year 2025. This is due to ongoing labor pressures, such as wage increases for union nurses that have driven up expenses, and other challenges Northern Light faces when trying to cut costs.
