Blair County Hospital, Pa., 1998A, 2009 Raised to A-Plus by S&P

Standard & Poor's Ratings Services said it raised to A-plus from BBB-plus its long-term and underlying ratings on Blair County Hospital Authority, Pa.'s revenue bonds, series 1998A and 2009, issued for Altoona Regional Health System.

The outlook is stable.

"The upgrade is due to the debt becoming part of University of Pittsburgh Medical Center's master trust indenture, effective July 1, 2013," said Standard & Poor's credit analyst Liz Sweeney.

Standard & Poor's also affirmed its A-plus long-term and underlying ratings on various issuers' revenue bonds, issued for University of Pittsburgh Medical Center (UPMC). It also changed its long-term ratings to A-plus from AAA/A-1 on Allegheny County Hospital Development Authority's series 2010B-1 and 2010B-2 revenue bonds, issued for UPMC, due to a remarketing to index mode from variable-rate demand mode, effective July 1, 2013. It also withdrew its SPUR on those bonds. The outlook is stable.

UPMC's operating performance has softened considerably since last year, which management attributes to reimbursement pressure from commercial and government payors. However, due to strong investment income and a gain on the sale of UPMC's equity stake in a company, its excess income remains adequate to support the rating at this time.

Management has responded with cost-cutting initiatives that S&P expects will restore an adequate operating income in fiscal 2014, although the pressures currently reducing margins will remain, and it expects operating profitability to be slim. UPMC's acquisition of Altoona Regional Health System, expected to be effective on July 1, 2013, has a very minor dilutive financial impact on UPMC, and will further enhance UPMC's already-strong business position in western Pennsylvania.

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