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Citing expansion plans, S&P raises debt rating of Atlantic Health

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Standard & Poor’s has raised its rating on the debt of the Atlantic Health System, which operates Morristown, Overlook and Newton medical centers and is now acquiring Chilton Memorial.

S&P raised its rating, from A to A-plus, on debt issued by the New Jersey Health Care Facilities Financing Authority on behalf of AHS Hospital Corp., a subsidiary of Atlantic Health.

The rating upgrade reflects “continued solid operating performance and overall cash flow” and debt service coverage, S&P credit analyst Martin Arrick said in a statement. He cited “improvement in unrestricted cash and investments, and our view of Atlantic’s improved enterprise profile, which includes the successful acquisition of Newton Medical Center in 2011.”

He said Atlantic’s strengths include growing volumes, increased surgeries and a rising case mix index.

Arrick said Atlantic expects to improve its market position with the pending acquisition of Chilton Memorial Hospital. According to S&P, future risks include downward pressure on health care prices and volume, as well as the rise of new payment models keyed to the care of an entire population of patients, rather than the traditional fee-for-service model.

S&P said Atlantic “appears reasonably well positioned” for these changes through its participation in the Atlantic accountable care organization.

Reporter Beth Fitzgerald is @BethFitzgerald8 on Twitter.

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