Fitch Rts Benedictine Hea Sys - St. Mary's Duluth Clinic Hea Sys Oblig Grp, MN Bds 'A-'.Business Editors NEW YORK--(BUSINESS WIRE)--Feb. 2, 2004 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. has assigned an 'A-' rating to the approximately $143 million Duluth Economic Development Authority health care facilities revenue bonds (Benedictine Health System - St. Mary's Duluth Clinic Health System Obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. Group) series 2004. In addition, Fitch has placed an underlying 'A-' rating on the obligated group's outstanding debt, which is listed below. The Rating Outlook is Stable. Bond proceeds will be used to finance future capital expenditures, refund $12 million of outstanding series 1993 bonds, fund a debt service reserve, and pay costs of issuance. Total debt outstanding after this issuance will be $359 million. The bonds are expected to sell the week of Feb. 9 by Piper Jaffray & Co. The 'A-' rating is based on Benedictine Health System-St. Mary's Duluth Clinic Health System Obligated Group's (BHS-SMDC) strong market position, improved operating performance, depth and breadth of services offered, and opportunities for cost savings and increased efficiencies. BHS-SMDC has a significant presence in northern Minnesota with over 60% market share in its primary service area, twice the market share of its closest competitor, St. Luke's Hospital. BHS-SMDC's flagship facility, St. Mary's Medical Center St. Mary's Medical Center may refer to:
Operating performance has improved significantly through the interim period with a 3.8% operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: through the five months ended Nov. 30, 2003 from a negative 0.3% operating margin in fiscal 2003. Operational improvements have been largely due to a reduction of expenses and increased volume compared to the prior year. Expense reductions have occurred in the areas of labor and supplies with an emphasis on increased productivity. BHS BHS beta-hemolytic streptococci. and SMDC SMDC Space and Missile Defense Command (US Army) SMDC Server Management Daughter Card SMDC St. Mary's Duluth Clinic (Duluth, MN) SMDC Shielded Mild Detonating Cord formalized its relationship by creating a parent organization, BHS/SMDC Supporting Organization (BSSO BSSO Bilateral Sagital Split Osteotomy BSSO British Security Services Organization ), on Jan. 6, 2004. Although it is a new parent organization, the collaborative relationship between BHS and SMDC dates back to 1997 when an agreement was reached to borrow debt together. Fitch views the creation of the parent organization positively as there are numerous opportunities for increased efficiencies and cost savings including group purchasing and department consolidation. In addition, strategic and financial planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against will be done at the corporate level with major reserve powers held by the BSSO board. Credit concerns include modest liquidity, a high debt burden, a heavily unionized workforce, and exposure to long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. challenges. Most of BHS-SMDC's financial ratios are below Fitch's 'A' category credit medians, however, Fitch believes the improvement exhibited through the interim period is sustainable, which should lead to modest liquidity growth. Despite this, debt measures are high with pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma debt service coverage averaging an annual 2x from fiscal 2000-2003 and pro forma cash to debt of 72.6% at Nov. 30, 2003. Debt service coverage through the interim period improved to a solid 3x, which Fitch expects to be maintained. Fitch believes that BHS-SMDC will continue to face rising labor costs due to its heavily unionized workforce, especially with the significant bargaining clout of the nurses union. A majority of the non-obligated group affiliates are long-term care facilities, which exposes the organization to industry-wide pressures. The main issue for long-term care entities is the inadequate governmental reimbursement and 10 of the 15 non-obligated group long-term care facilities operated at a loss in fiscal 2003. However, management is actively monitoring these entities and has divested of underperforming assets in the past, which Fitch views favorably. BHS-SMDC Obligated Group is an integrated health care integrated health care, n healthcare services combining the best of conventional and complementary health care. delivery system headquartered in Duluth, MN. BHS-SMDC provides a wide range of services from acute to long-term care. Major facilities include St. Mary's Medical Center, a 350 staffed bed acute care hospital; Duluth Clinic, a 387 physician multi-specialty clinic; St. Joseph Medical Center St. Joseph Medical Center may refer to: In the United States:
n. Abbr. SNF An establishment that houses chronically ill, usually elderly patients, and provides long-term nursing care, rehabilitation, and other services. , 25 assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. units, and 45 independent living units. Total obligated group revenue in fiscal 2003 was $679 million. BHS-SMDC Obligated Group covenants to provide quarterly and annual disclosure to Fitch and bondholders. Outstanding debt: -- $35,860,000 Duluth Economic Development Authority health care facilities revenue bonds (Benedictine Health System-St. Mary's Medical Center) series 1993C (insured: Ambac), 'A-'; (1) -- $10,100,000 City of Brainerd, Minnesota (Benedictine Health System-St. Joseph's Medical Center) series 1993E (insured: Ambac), 'A-'; (1) -- $17,100,000 Duluth Economic Development Authority variable rate demand health facilities revenue bonds (Benedictine Health System-St. Mary's Duluth Clinic Health System Obligated Group) series 1997, 'A-'; (2) -- $129,820,000 Minnesota Agricultural and Economic Development Board health care facilities revenue bonds (Benedictine Health System-St. Mary's Duluth Clinic Health System Obligated Group) series 1999A (insured: MBIA MBIA Montana Building Industry Association MBIA Municipal Bond Insurance Association MBIA Michigan Boating Industries Association MBIA Municipal Bond Investors Assurance MBIA Massachusetts Brain Injury Association MBIA Maryland Business Incubation Association ), 'A-'; (3) -- $21,630,000 Wisconsin Health and Educational Facilities Authority health care facilities revenue bonds (Benedictine Health System-St. Mary's Duluth Clinic Health System Obligated Group) series 1999B (insured: MBIA), 'A-'; (3) (1) This is an underlying rating. The bonds are insured by Ambac Assurance Corp., whose insurer financial strength is rated 'AAA' by Fitch. (2) This is an underlying rating. Fitch was not asked to rate the bonds based on the support of a letter of credit from U.S. Bank. (3) This is an underlying rating. The bonds are insured by MBIA, whose insurer financial strength is rated 'AAA' by Fitch. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion