By Danielle Pierce

A strong financial outlook is critical for a health system. And one of the most telling markers of success are the global financial ratings released each fall by Moody’s and Standard & Poor’s (S&P). These ratings provide valuable insights into an organization’s financial health and strategic priorities. For health systems in particular, they highlight the organization’s ability to maintain stability while delivering high-quality patient care.

In their recently released scores for health systems across the nation, VCU Health received an excellent level bond rating of Aa3 stable from Moody’s and AA- stable from S&P’s. The ratings reflect VCU Health’s ongoing strengths and strong financial profile, building on the continued momentum from the March ratings.

VCU Health News sat down with James Siegel, VCU Health’s chief financial officer, and Chris Nordberg, VCU Health’s treasurer, to break down what these ratings mean, the factors driving the strong performance, and how they position the health system for continued growth.

Can you explain the significance of the financial ratings report for VCU Health?

Nordberg: Think of the health system’s credit ratings like a personal credit score. They directly affect how much it costs us to borrow money. The higher the rating, the lower our borrowing costs — whether it’s through public debt, loans from banks, or other forms of credit.

But it’s important to note that it’s not just about finances. Strong ratings also boost our reputation. We work with many vendors and partners who pay attention to this. For example, it helps during contract negotiations or when we’re forming joint ventures with other organizations. Being a highly rated health system gives us credibility and positions us as a strong, reliable partner.

What is the difference between the ratings that were shared in March 2024 and now?

Siegel: The ratings haven’t changed — they’re still Aa3 stable from Moody’s and AA- stable from S&P’s. What’s different is the context. The latest reports include our full results from fiscal year 2024 (FY2024), which were even stronger than the agencies’ assessment of our mid-year performance in March. They also highlight that we’ve carried that strong performance into FY2025. It’s a good sign of consistency and stability.

Why are these ratings important for patients and what does it mean for patient care?

Siegel: For patients, these ratings are a reflection of how financially healthy we are. That’s important because it allows us to reinvest in things like cutting-edge clinical research, better patient experiences, and modern infrastructure.

Take quality of care, for example, recently VCU Medical Center and VCU Health Tappahannock Hospital earned “A’s” on LeapFrog’s Fall Safety ratings, which speaks to our excellent outcomes.

Strong financial health means we can continue to attract top specialists and provide the advanced care that patients need.

What specific factors contributed to these strong ratings?

Nordberg: A few things stand out. First, our debt position is very conservative — we haven’t taken on new debt in years. Second, our cash position is solid. That’s a big factor for the rating agencies.

Siegel: Also, our investments in technology contributed to these ratings. All of these pieces work together to strengthen our financial position.

What key strategies have strengthened VCU Health’s financial position?

Siegel: We’ve invested in outpatient care, especially through our Adult Outpatient Pavilion. Over the past three years, outpatient visits have significantly increased, which means more patients have access to the high-quality care we provide.

We’ve also tackled labor costs and have significantly reduced our spending on contracted labor by focusing on workforce retention.

Another focus remains on continued operational efficiency. In addition, we’ve worked with our group purchasing organization to get better pricing on supplies, and we’ve been disciplined in how we spend. All of these strategies have made a big difference.

How do these ratings influence VCU Health’s ability to secure funding for future projects?

Nordberg: The ratings are huge when it comes to borrowing money. A higher rating means lower borrowing costs, which saves us millions. But even more importantly, these ratings ensure we can access funding even in tough economic times.

For example, during the 2008 financial crisis, not every health system could get funding. Higher-rated systems, like us, were better positioned to secure the capital we needed. These ratings give us flexibility to explore different financial products, which helps us plan and invest for the future.

What’s next for VCU Health in maintaining or exceeding future rating expectations?

Siegel: We’re doubling down on key areas. For example, we continue to invest and expand critical services such as additional patient beds for the neonatal intensive care unit within Children's Hospital of Richmond at VCU and we are close to opening additional transplant beds within VCU Medical Center.

We’re also staying focused on operational efficiency, outpatient growth, and strategic capital investments. All of these initiatives are designed to ensure we continue to drive excellent quality outcomes and patient experience, while also operationally and financially strong in the eyes of the rating agencies.

What’s the most important take-away people should know about the ratings?

Nordberg: Our success is the result of everyone’s hard work — from our frontline staff to leadership. These ratings reflect not just financial stability, but the incredible care we deliver every day. It’s a team effort, and I’m proud of what we’ve accomplished together.

Siegel: I couldn’t agree more. It's one thing to have great financial health, but we deliver excellent, very acute, high-quality patient care each day. The providers, the clinicians, the technicians, the operators, the support staff – every single person, at every single level within our health system – makes this possible. When you walk through the doors of any VCU Health facility, it's that comprehensive lens that drives the quality of our rating and that is the bottom line.

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