UMC’s bond rating may be affected because of Children’s debt

County officials are grappling with the possibility that the County Hospital District will suffer from a negative rating change because of the El Paso Children’s Hospital debt and talks of bankruptcy.

“It’s terrifying, we have to see a solution, we have to see it quick,” said County Commissioner Andrew Haggerty on Monday.

Global agency, Fitch Ratings, said there is the strong probability of a negative rating change for several El Paso County Hospital District bonds. The District oversees University Medical Center.

“This is one of those examples when I talk to children’s hospital board members and they say ‘what’s the rush’ – this is an example of why there’s urgency. Because of the ripple effect that it has on UMC and the UMC finances,” said County Judge Veronica Escobar on Monday.

In August of 2014, Fitch downgraded the hospital district’s rating from a double-a to a double-a minus. There is a possibility the rating could be downgraded again — this time from double-a minus to single-a plus. A low rating will make it harder for the county hospital district to issue bonds in the future.

Fitch ratings has two main concerns: the uncertainty over El Paso Children’s Hospital debt to UMC and public announcements from Children’s regarding possible bankruptcy protection to avoid a takeover by UMC. Fitch Ratings officials said this highlights a lack of ability to resolve organizational differences.

Escobar said there were “a lot of phone calls” over the weekend from Commissioners, UMC officials and members of the public to Children’s board members concerned over a possible bankruptcy. She said the struggling hospital would be “in a far worse situation” should it choose bankruptcy over a deal with UMC. “Then it (the Children’s Hospital) ultimately ends up in UMC’s hands without any of the terms that UMC has agreed to to this point.”

“I am hoping that they will agree to coming back to the table to try to finalize some of those terms. It is possible and it can happen this week, they just have to make the choice to do that and to bring resolution to this and so all eyes are on them,” added Escobar.

ABC-7 reached out to every voting member of the Children’s board but they all were either unavailable or refused to comment, deferring all questions to board Chair Rosemary Castillo. ABC-7 went to Castillo’s workplace but staff said she was too busy to comment.