The rating on New Jersey Health Care Facility Finance Authority's bonds, issued for Capital Health System, reflects significant potential for cost savings and service consolidation, which is needed in overbedded and highly competitive Trenton. (Capital Health System is a new system formed from the merger of Helene Fuld and Mercer Medical Centers upon bond issuance.) The savings are critical to rating maintenance due to recent significant losses at each facility from strategic initiatives, reliance on $7 million in subsidy funds, and a restrictive payor mix. A solid cash position gives Capital flexibility to make difficult choices and changes. The hospitals have worked together for two years; a joint board and single management team is in place. Consultants identified $28 million
