The rating downgrade on New Jersey Health Care Facilities Finance Authority's bonds, issued for Englewood Hospital and Medical Center., reflects weakened profitability and a sharp decline in liquidity. These factors are offset by adequate debt service coverage and a light debt burden. The bonds are secured by a revenue pledge of the hospital. Englewood Hospital and Medical Center, a 520-bed acute-care teaching hospital, is located in affluent and competitive Bergen County. A shifting payor mix, reduced state subsidies, and one-time restructuring expenses have dampened Englewood's recent profitability. Operating income continued to decline, in part due to a 2.5 times (x) increase in bad debt expense and a restrictive governmental payor mix, with 58% of revenues from Medicare and Medicaid. As
