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Chilton Memorial Hospital, NJ Bonds Affirmed by S&P

NEW YORK, Dec. 31 /PRNewswire/ -- Standard & Poor's affirmed its single-'A' rating on New Jersey Health Care Finance Authority/Chilton Memorial Hospital's health care revenue bonds series 1993D.

The rating reflects a favorable payor mix, which helps contribute toward good financial performance, improved balance sheet, excellent debt service coverage, and a relationship with Valley Health System. Operating and excess margins were excellent in 1995 and 1996 with 8.9% and 6.9% operating margins, respectively and 12% and 10.6% excess margins, respectively. However, margins dropped to -2% and 1.6% in 1996 due to one time expenses associated with an early retirement program, which was well received. Interim results for 1997 show a return to positive financial performance. Sept. 30, 1997 nine month actuals reflect operating and excess margins of 4.7% and 11.5%. Debt service coverage was strong in 1994 and 1995 at 4.6 times (x) and 4.4x, and dropped to 2x in 1996. Contributing toward such results is a favorable payor mix with 21% of revenues derived from commercial payors. The hospital has reduced the average length of stay to 5.79 days indicating proper preparations for a more restrictive payor mix through greater managed care penetration have been implemented. Managed care currently accounts for 16.6% of gross revenues, up from 8.3% the prior year.

The balance sheet remains strong with 186 days cash on hand up from 138 days in 1993. Debt to capitalization has improved to 43.1% from a relatively high 54.9% in 1994. The hospital has begun a $25 million capital program, which will address needs in the emergency room and in the inpatient, outpatient, visitor and lobby areas. These renovations will be funded with board designated cash, and therefore could weaken the current liquidity position.

The hospital has limited competition in its primary service area that consists of 13 surrounding townships. Chilton has canceled its affiliation agreement with Morristown Memorial Hospital and has entered into a corporate affiliation with Valley Health System, Inc. Relations remain positive with both systems and merger talks continue and are possible in the next two to three years.

OUTLOOK: STABLE

The outlook reflects expectations that the strong financial and excellent market positions will continue, Standard & Poor's said. -- CreditWire

SOURCE Standard & Poor's CreditWire
 -0- 12/31/97


/CONTACT: Christine T. Maxwell, 212-208-1781, or Susan E. Hill, 212-208-8589, both of S&P, New York/

/Web site: http://www.ratings.standardpoor.com/

CO: Chilton Memorial Hospital ST: New Jersey IN: HEA SU: RTG

DY -- NYW049 -- 2288 12/31/97 11:52 EST http://www.prnewswire.com
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Publication:PR Newswire
Date:Dec 31, 1997
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