Catholic Healthcare West's Financial Outlook Upgraded by Moody's; Family of Hospitals Continues Financial Turnaround.

Business Editors and Health/Medical Writers

SAN FRANCISCO--(BUSINESS WIRE)--Oct. 28, 2002

Catholic Healthcare West (CHW), one of the leading not-for-profit hospital systems in the country and the largest Catholic system in the western United States, announced today that Moody's Investors Service has affirmed CHW's Baa2 bond rating and revised its outlook to "stable" from "negative." The rating and outlook apply to approximately $2.2 billion of outstanding debt.

Moody's positive action follows decisions by Fitch, which also revised CHW's outlook to "stable" from "negative," and by Standard & Poor's, which recently affirmed the organization's "stable" outlook. Moody's, Fitch and Standard & Poor's are leading credit rating firms.

"This is another indicator that we are sustaining our financial momentum," said Lloyd H. Dean, president and chief executive officer, CHW. "CHW's success is the result of strategic planning, discipline and the commitment of our physicians and nearly 36,000 health care and support personnel, all of whom are helping to fulfill our mission of delivering compassionate, high-quality and affordable health services to the communities we serve."

In its report, Moody's, "the outlook revision reflects operating improvement through the end of fiscal year 2002 driven by restructuring initiatives, reductions in system overhead costs, better managed care rates and adequate volume growth."

In addition, according to the report, "over the past 18 months, CHW has made progress in achieving several objectives including restructuring the organization's management and governance, making productivity improvements within a number of markets, and renegotiating major managed care contracts to reduce exposure to capitation and obtain notable rate increases. Restructuring initiatives have reduced corporate and regional overhead, resulting in over $70 million in savings, and increased corporate control over divisions."

"Our improved financial performance is enabling CHW to advance the organization's commitment to our communities and our hospitals," said Dean. "We're currently investing additional resources to expand CHW's services, particularly in Arizona, Nevada and the Central Valley of California. And, we're investing in new technologies including clinical information systems, as well as the latest cardiology and imaging technology."

CHW also announced recently that the system will begin offering an employer-paid dependent health care option to all non-represented employees beginning January 1, 2003 (the effective date for represented employees will depend on collective bargaining priorities and individual market conditions).

About CHW

Founded in 1986, Catholic Healthcare West is one of the leading not-for-profit health care systems in the country and the largest Catholic health care system in the western United States with 42 acute care facilities and two medical groups in California, Arizona and Nevada. The CHW network of more than 6,000 physicians and nearly 36,000 employees cares for more than four million patients and provides more than $300 million in community benefits and care for the poor annually. For more information, visit our website at www.CHWhealth.com.