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TMCNet:  Fitch Rates Sibley Memorial Hospital's Series 2009 Bonds 'AA-'

[August 29, 2013]

Fitch Rates Sibley Memorial Hospital's Series 2009 Bonds 'AA-'

SAN FRANCISCO --(Business Wire)--

Fitch Ratings has assigned an 'AA-' rating to the outstanding District of Columbia (DC) (Sibley Memorial Hospital Issue) hosp rev bonds ser 2009. The rating is based on Johns Hopkins Health System (JHHS) as Sibley Memorial Hospital (SMH) became part of the JHHS obligated group as of Aug. 28, 2013 and the SMH series 2009 bonds are now on parity with JHHS' outstanding debt.

In addition, Fitch has affirmed the 'AA-' rating on JHHS's outstanding debt.

The Rating Outlook is Stable.

SECURITY

The bonds are secured by a gross revenue pledge of the JHHS obligated group (OG). The OG comprises 84% of total assets and 71% of total revenue of the consolidated entity in fiscal 2012 (June 30 fiscal year end). Fitch's analysis is based on the consolidated entity.

KEY RATING DRIVERS

WORLD RENOWNED CLINICAL REPUTATION: JHHS's reputation and brand recognition for excellent tertiary and quaternary care and state of the art clinical research is a primary credit strength. Through Johns Hopkins Medicine (JHM), JHHS has an integral and collaborative relationship with Johns Hopkins University (JHU; rated AA+), which further leverages the strength of both organizations.

SYSTEM INTEGRATION: JHHS is focusing on integrating its constituent facilities and operations with the roll-out of system-wide business and clinical systems including the implementation of an electronic medical record. Only one hospital affiliate, All Children's Hospital, remains outside the obligated group.

CONSISTENT FINANCIAL PERFORMANCE: JHHS's operating performance has been consistent while balance sheet metrics have improved. However, most of JHHS's financial ratios fall below the 'AA' category medians as the majority of JHHS's operations are in a rate regulated environment in the state of Maryland.

MANAGEABLE CAPITAL NEEDS: JHHS recently completed a significant building project that cost over $1 billion at its mai campus. Future capital spending will focus on Bayview's campus expansion and renovation, SMH's replacement facility, and information technology.

RATING SENSITIVITIES

PENDING LITIGATION: The rating does not incorporate the impact of a recent patient privacy case, in which an employed physician secretly and illegally made photographic and video recordings of patient encounters in a JHHS clinic (Levy case). The matter is under investigation by the police and FBI. An estimation of potential claims is not available and lawsuits have been filed. JHHS has various levels and types of insurance coverage that could be applied if needed. Fitch will monitor the situation and comment or take rating action as warranted.

For more information, see JHHS' press release dated August 1, 2013.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Nonprofit Hospitals and Health Systems Rating Criteria' (May 20, 2013).

Applicable Criteria and Related Research:

Nonprofit Hospitals and Health Systems Rating Criteria - Effective Aug. 12, 2011 to July 23, 2012

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648836

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=800818

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.


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