Fitch Releases 2003 Median Ratios for U.S. Hospitals.

Business Editors

NEW YORK--(BUSINESS WIRE)--Aug. 6, 2003

Although operating performance was stable in 2002, nominal increases in managed care rates this year, along with increased charity care from a growing uninsured population, will likely cause hospital revenue to grow at a slower pace than expenses, causing a moderate decline in operating profitability in 2002, according to a new report revealing financial median ratios for nonprofit hospitals and health care systems published today by the Fitch Ratings. In 2002, operating performance for hospitals and health care systems continued to exhibit stability for the third year in a row, while liquidity and debt service coverage ratios declined and capital needs increased.

'Although Fitch expects operating performance in 2003 to fall short of last year's results, bottom-line margins will benefit from anticipated investment improvement,' said Craig Kornett, Senior Director, Fitch Ratings. 'As a result, Fitch does not expect any further decline in debt service coverage or liquidity levels.'

Fitch's median excess margin ratio eroded 33% to 2% in 2002 from 3% in 2001 and 2000. The poor returns from the financial markets produced very little investment income, resulting in nominal non-operating revenue. The poor returns from the financial markets also contributed to declines in Fitch's median debt service overage ratio and days cash on hand ratios.

The new report '2003 Media Ratios for Nonprofit Hospitals and Health Care Systems' can be found on Fitch's web site 'www.fitchratings.com' by linking to the 'U.S. Public Finance Sector' and clicking on 'Special Reports'. The report details financial medians including balance sheet, operating, and capital related ratios.