The rating on New Jersey Health Care Facilities Finance Authority's bonds, issued for East Orange General Hospital (EOGH) reflects: * A low debt level, with maximum debt service at 2.4% of revenue and debt to capital at 25%, * Solid cash and board designated funds of $33 million, equal to two times outstanding debt and 157 days' expenses, and * Good historical profitability, although operating performance was negative in 1998 primarily due to disruptions in patient flow from a protracted renovation project. A higher rating is precluded by: * A challenging operating environment characterized by a crowded and fragmented hospital market, declining population, low income levels, and a large medically indigent population; and * Substantial reliance on disproportionate share and
