CHICAGO — Trinity Health Credit Group’s plan to buy Loyola University Health System should bolster the latter’s fiscal standing, though analysts say it’s too early to tell what impact the acquisition will have on Trinity’s balance sheet.

Novi, Mich.-based Trinity — rated in the mid double-A range by all three rating agencies — and Illinois’ Loyola University announced on Friday the signing of a letter of intent for the university to sell its hospital system to Trinity, the fourth-largest Catholic system in the country. Though Loyola Health’s finances are on the upswing, it still faces challenges and is rated at Baa3 with a positive outlook by Moody’s Investors Service.

The systems did not disclose financial details of the transaction but said Trinity would provide an infusion of capital investment, including $75 million towards a $150 million medical research facility on Loyola University Medical Center’s campus west of Chicago. The university would provide the other $75 million.

“The health care industry is going through accelerated change across the country, and so we believe that now is the right time for LUC and Trinity Health to seize the opportunity to strengthen Catholic health care,” Trinity president Joseph Swedish said. Loyola will continue to own and run its medical and nursing schools.

Moody’s Lisa Martin said Loyola would benefit under the union. “Joining a larger system with capital resources will provide access to greater financial and management resources,” she said.

Both Martin and Standard & Poor’s analyst Kevin Holloran said it was too early to tell how the acquisition would affect Trinity’s finances.

Trinity operates 46 hospitals in nine states. The system has more than $7.1 billion in revenues annually and more than $3 billion in cash and assets. Ahead of a $276 million sale last fall, all three rating agencies affirmed the system’s mid-double-A ratings assigned to $2.7 billion of debt. It has a $2.4 billion capital campaign expected to include $250 million of annual borrowing over the next three years.

Analysts consider the system’s key strengths to be its size, geographical diversity, strong liquidity, and overall operating performance. They warn that the ambitious capital campaign could strain its balance sheet, but noted that management tends to review the capital plan annually, scaling back on expenditures if necessary.

Loyola’s system includes Loyola University Medical Center in west suburban Maywood, Gottlieb Memorial Hospital in west suburban Melrose Park, and 28 primary and specialty care facilities in the Chicago region. The health system carries $350 million of outstanding debt and had revenues of $1 billion in 2010. The university is rated separately.

Moody’s last fall revised the health system’s outlook to positive based on improved 2010 operating results, when the system lowered its operating losses to $7 million from $37 million a year earlier. The system has a modest cash position with 84 days cash on hand and a risky debt structure with 69% supported by bank letters of credit. The acquisition still requires regulatory approval and board approval from Trinity and Loyola.

The merger is part of a national trend that favors the growth of larger systems among not-for-profit health care providers grappling with fiscal pressures such as declining volume, higher charity costs, lower reimbursements, and national health care reform. Two of Illinois’ larger Catholic systems — Resurrection Health Care and Provena Health — announced earlier this year they are considering merging.

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