LOS ANGELES — The anticipated merger of two West Coast hospital systems won't affect their AA-minus bond ratings, according to a S&P Global Ratings report.

Washington-based Providence Health & Services and California-based St. Joseph Health System received approval from the California Attorney General's office to merge last week.

The approval from Attorney General Kamala Harris came with strings attached, however.

The AG's office asked that the hospital systems maintain levels of charity care spending and seismic compliance and continue to participate in the state's Medi-Cal program.

Providence's management told S&P that it is reviewing the requirements to make sure it understands the implications for the prospective merger, according to the ratings report issued July 23.

The merger could occur as early as July 1.

"We expect to meet with senior management in early August and will complete a review of the plan of consolidation including possible changes to the table of organization and the existing obligated group debt structures," S&P analysts wrote in the report. "Management has indicated a combination of the existing two obligated groups is likely, although the exact timing and details are not yet available."

While S&P analysts said there probably are synergies and benefits to the combination, which over time could help improve the rating on the surviving organization, they aren't taking any rating action now, given that the ratings are already aligned with each other.

"We would expect to complete a review after we have met with management and reviewed the plan of consolidation in detail.

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