Who’s up and who’s down

UP
Martin Memorial Medical Center
Stuart, Fla.

Standard & Poor’s analysts revised their outlook on debt associated with Martin Memorial Medical Center from stable to positive based on strong operating performance in 2004 and 2005 and the expectation of continued strong cash generation. The BBB+ rated two-hospital, 336-staffed-bed system should also realize a positive impact on volumes and long-term profitability thanks to the recent addition of open-heart surgery capability, says S&P.

Martin Memorial, which also operates three “medicenters” and several smaller outpatient medical centers, also benefits from its ability to capture 45 percent of the primary service area market despite competition from two HCA Inc. for-profit hospitals in the primary-service area.

DOWN
Temple University Health System
Philadelphia

S&P analysts revised their outlook on bonds associated with Temple University Health System to negative based on a “significant” $44.8 million operating loss associated with reduced patient volumes in the first half of the 2006 fiscal year. S&P warned of a rating downgrade should the system’s finances continue the performance seen in the first half of 2006.

However, analysts noted management’s strong track record with improvement efforts and said they believed the system will emerge with a “clear improvement plan in the next few months.” However, such a turnaround, they cautioned, could take one to two years given the size of the current operating gap thus far. TUHS has $344 million of long-term debt.

—Philip Betbeze