Summary: Washington Health Care Facilities Auth

Primary Credit Analysts: Cynthia S Keller, New York, (1) 212-438-2035; cynthia.keller@spglobal.com Cynthia S Keller, New York, (1) 212-208-1840 Lisa Zuckerman, San Francisco, (1) 415-765-5036 The rating on Washington Health Care Facilities Authority's bonds, issued for Peace Health, reflects solid and improving finances driven by strong business positions in four diversified West Coast markets and management's willingness to make changes necessary for the organization's future viability. Standard&Poor's analysis focuses on the entire Peace Health system, including a recently owned HMO, although technically there are portions of the system that are not obligated on the debt. Operating income fell to $9 million in 1997 from $20 million in 1993, although earnings before interest and depreciation rose during the same period.

...The rating on Washington Health Care Facilities Authority's bonds, issued for Peace Health, reflects solid and improving finances driven by strong business positions in four diversified West Coast markets and management's willingness to make changes necessary for the organization's future viability. Standard & Poor's analysis focuses on the entire Peace Health system, including a recently owned HMO, although technically there are portions of the system that are not obligated on the debt. Operating income fell to $9 million in 1997 from $20 million in 1993, although earnings before interest and depreciation rose during the same period. This decline is largely due to three years of losses, totaling $20 million, from Peace Health's Select Care HMO. This HMO was sold to Sisters of Providence in December 1997 and future profitability should improve substantially. Net income has been extremely stable; bolstered in 1996 and 1997 by strong investment markets, profits have ranged from $18 million-$26...

Summary