Fitch Places Holy Spirit Health System (PA) Revs on Rating Watch Positive

NEW YORK--()--Fitch Ratings has placed the 'BBB+' rating on the following revenue bonds issued on behalf of Holy Spirit Health System (HSHS) on Rating Watch Positive:

--$85.2 million West Shore Area Hospital Authority series 2011 A and B.

The bonds previously had a Stable Outlook.

SECURITY

The bonds are secured by a pledge of gross revenues of the Obligated Group, and an open-end mortgage on hospital property. Holy Spirit Hospital is the only member of the Obligated Group. There is no debt service reserve fund. Upon consummation of the merger, HSHS became an affiliate of GHS and GHS will assume the assets and liabilities of HSHS.

RATING SENSITIVITIES

AFFILIATION WITH GEISINGER HEALTH SYSTEM: On June 19, 2014 the Sisters of Charity Healthcare Corporation and Holy Spirit Health System (HSHS) signed a Definitive Agreement to Merge with Geisinger Health System GHS)and the merger is expected to close around October 1, 2014. The Rating Watch Positive reflects the potential operational and financial support which HSHS may realize as an affiliate of GHS.

CREDIT PROFILE

HSHS operates Holy Spirit Hospital (HSH, or the hospital), a 311 licensed bed acute care hospital located in Camp Hill, PA. The hospital makes up approximately 86% of the revenues and 81% of the unrestricted net assets of HSHS. Other significant members of the system include West Shore ALS, a pre-hospital care and emergency medical services company, Holy Spirit Corporation, a real estate holding company, and Spirit Physician Services, Inc. (SPSI), an employed multispecialty physician practice. HSHS has total annual revenues of $364.7 million (fiscal year ended June 30, 2014, unaudited).

GHS, which is not rated by Fitch, is a large, integrated health care system consisting of 5 acute care hospitals (1,326 licensed beds), over 1,100 employed physicians and 478,000 member Geisinger Health Plan. In fiscal 2014, GHS reported total revenues of $3.98 billion.

Disclosure:

Following the merger, HSHS will be consolidated into GHS financial reporting.

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

Applicable Criteria and Related Research:

--'U.S. Nonprofit Hospitals and Health Systems Rating Criteria' (May 30, 2014);

--'Revenue-Supported Rating Criteria' (June 16, 2014).

Applicable Criteria and Related Research:

U.S. Nonprofit Hospitals and Health Systems Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=746860

Revenue-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750012

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=892894

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Contacts

Fitch Ratings
Primary Analyst
Eva Thein, +1 212-908-0674
Senior Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Dmitry Feofilaktov, +1 212-908-0345
Analyst
or
Committee Chairperson
James LeBuhn, +1 312-368-2059
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Eva Thein, +1 212-908-0674
Senior Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Dmitry Feofilaktov, +1 212-908-0345
Analyst
or
Committee Chairperson
James LeBuhn, +1 312-368-2059
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com