Jordan Hospital, Mass., Lowered to B-Plus by S&P

Standard & Poor's Ratings Services said it lowered its rating on Massachusetts Development Finance Agency's $78.1 million series 1992B, 1998D, and 2003E bonds issued for Jordan Hospital to B-plus from BB-minus.

The outlook is developing, which indicates the agency could either raise or lower the rating on Jordan depending on factors that are uncertain this time.

"The lowered rating reflects Jordan's weak financial profile, highlighted by declining volume and net patient revenue, as well as an operating loss that varies significantly from budget through the first six months of fiscal 2013 ended March 31," said Standard & Poor's credit analyst Jennifer Soule. "We believe that these credit risks coupled with the organization's high debt burden and highly elevated debt-to-capitalization ratio are more indicative of a B-plus rating."

The developing outlook reflects the view that if Jordan's credit risks do not improve through the one-year outlook period, the rating could be lowered further. The hospital could earn a positive outlook or a higher rating if the system's pending affiliation with Beth Israel Deaconess Medical Center (BIDMC) and contractual relationship with Atrius Health prove successful via a definitive agreement and if Jordan's volume and financial profile stabilizes, reflecting overall financial improvement.

BIDMC is part of CareGroup, which is a significantly larger health system located in Boston, Mass., and Atrius Health is an alliance of physician groups located in and around the Boston area. These strategic relationships could create significant benefits for Jordan, including cost savings, system efficiencies, physician development, and an infusion of capital.

Jordan Hospital operates a 155-bed acute-care hospital in Plymouth, Mass. A mortgage on certain property and gross receipts secure the bonds. Jordan Hospital is the only obligated entity; however, the hospital's parent company guarantees the bonds.

This analysis reflects financial results from the parent, Jordan Health Systems and several other subsidiaries including employed physicians. Jordan Hospital is not a party to any swap transactions and all its long-term debt is fixed rate.

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