The rating assigned to New Jersey Health Care Facilities Financing Authority's bonds, issued for Trinitas Hospital, formed through the pending merger of St. Elizabeth Hospital and Elizabeth General Medical Center (both rated 'BBB'), reflects the necessity of the merger to achieve cost savings and strengthen market position and leverage with payors in the competitive northern New Jersey market. Both organizations experienced deteriorating 1998 profitability and are heavily dependent on state subsidies. Together, St. Elizabeth's and Elizabeth General would have produced declining operating profitability, from 2.1% in 1995 to a negative 4.3% in unaudited 1998. Management is implementing a business plan developed by external consultants to reduce system costs by $127 million over five years. The plan calls for the closure
