The rating downgrade on New Jersey Health Care Facilities Financing Authority's bonds, issued for Pascack Valley Hospital (PVH), is based on continued inability to improve liquidity, weakened financial performance, and an increasingly competitive market. The balance sheet demonstrated only 25.4 days' cash on hand in 1996, remained at or below 30 days for over five years despite expectations of improvement. Furthermore, capital needs required to meet strategic needs were funded with $4.8 million in unrated debt in 1996 from a capital asset pool. Combined with 50% debt-to-capitalization, and no increase in working capital, the balance sheet is adequate at best. Operating performance declined each year from 1994-1996 with 1996 resulting in both an operating ($1 million), and excess loss ($400,000).
