CORRECT: Fitch Dwngrs Memorial Med Ctr, NM Bds to 'BBB-'; Rtg Watch Neg.Business Editors NEW YORK--(BUSINESS WIRE)--April 28, 2003 (In a press release issued earlier, the par amounts stated in the first paragraph were incorrect. The amended release follows.) Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. downgrades the rating on the approximately $44.7 million New Mexico New Mexico, state in the SW United States. At its northwestern corner are the so-called Four Corners, where Colorado, New Mexico, Arizona, and Utah meet at right angles; New Mexico is also bordered by Oklahoma (NE), Texas (E, S), and Mexico (S). Hospital Equipment Loan Council hospital revenue bonds Hospital revenue bond A bond issued to finance construction of a hospital by a municipal or state agency. hospital revenue bond Tax-exempt debt issued by a city, county, state, or hospital authority with debt service guaranteed by hospital (Memorial Medical Center, Inc. Project) series 1998 and $13.5 million New Mexico Hospital Equipment Loan Council hospital revenue bonds (Memorial Medical Center, Inc. Project) series 1996 to 'BBB-' from 'BBB'. In addition, Fitch places the bonds on Rating Watch Negative, indicating a potential downgrade. The downgrade is based on Memorial Medical Center's (MMC See MultiMediaCard and Microsoft Management Console. ) weak financial performance in fiscal 2002 due to new competition in its primary service area resulting in reduced census and revenue. In addition, the payor mix shifted to more uninsured patients, which exacerbated MMC's current condition. As a safety net hospital, MMC provides health care to a high indigent indigent 1) n. a person so poor and needy that he/she cannot provide the necessities of life (food, clothing, decent shelter) for himself/herself. 2) n. one without sufficient income to afford a lawyer for defense in a criminal case. population as approximately 33-35% of the service area's population has no health insurance. The new for profit hospital owned by Triad, has drawn away many of MMC's insured (and profitable) patients, leaving MMC with less cushion from other payors to offset indigent health care costs. In the fourth quarter of 2002, MMC lost approximately $3 million a month. MMC had 1.2x debt service coverage in fiscal 2002 and is expected to have a rate covenant Rate covenant A provision governing a municipal revenue project financed by a revenue bond issue, which establishes the rates to be charged users of the new facility. rate covenant violation. Management has been proactive in addressing the financial deterioration of the organization, including retaining Wellspring well·spring n. 1. The source of a stream or spring. 2. A source: a wellspring of ideas. wellspring Noun as a consultant. Management has implemented several cost cutting and revenue enhancing initiatives including eliminating 170 full-time equivalents, divesting certain unprofitable programs, monetizing assets, renegotiating managed care contracts, and supply chain initiatives. MMC expects to breakeven in FY 2003 and through the 3 months ended March 31, 2003, MMC has reduced its loss per month. Fitch places the bonds on Rating Watch Negative due to ongoing uncertainties. The future of the organization could include a possible affiliation with another not-for-profit, potential sale to another system or remaining independent. Memorial Medical Center is a 256 staffed bed hospital located in Las Cruces, NM with $181 million in total net revenue in fiscal 2002. MMC has provided timely disclosure to Fitch. |
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