The downgrade on New Jersey Health Care Facility Finance Authority's bonds, issued for Union Hospital and Mega Care, reflects unmet expectations for income statement and balance sheet improvements; and less confidence in the parent corporation's (St. Barnabas Corp.) ability to support this debt as the St. Barnabas system has expanded. Several new components have been added to the system since the rating was last reviewed, including some that are not financially strong and also require assistance. Financial performance remains weak, with operating and excess margins for Union Hospital and Mega Care combined at 1.4% and 1.5%, respectively, in 1996. While management has been able to sustain positive margins despite less charity care funding, maximum debt service coverage in 1996 remains
