Press Release

For More Information Contact the NJHCFFA
Communications Department:
609-292-8585 X142
For Release: June 19, 2009



CONTACT: Stephanie Bilovsky
PHONE: 609-292-8585
Date: June 19, 2009




(Trenton) On June 18, 2009, the New Jersey Health Care Facilities Financing Authority (the "Authority") successfully issued $152,925,000 in bonds on behalf of The Community Hospital Group, Inc. (trading as JFK Medical Center) through the Hospital Asset Transformation Program ("HATP").


The HATP was enacted so that a hospital terminating acute care services at a specific location for financial reasons can access low-cost financing vehicles to borrow the funds needed to help: pay existing debt, close services in an orderly fashion, and expand another facility to handle patients from the closed facility. This accomplishes several policy goals, such as reducing overbedding as reported by the Commission on Rationalizing New Jersey's Health Care Resources, providing some relief to hospitals that are financially-strapped from the resulting stranded debt, and preserving as many services and jobs as possible in a nearby facility.


Under the HATP, the Authority can issue State-backed bonds, secured by a contract with the State Treasurer, on behalf of a hospital meeting certain criteria. These bonds can be used to: refund the outstanding bonds of a hospital terminating acute care services at a location where they are no longer useful; pay closure and transition costs of the closed hospital; and, pay costs of facility improvements to the surviving hospital to help handle the inflow of services and patients. This program allows the hospital to borrow funds and benefit from the good credit rating, resulting from the bonds' State contract backing, which provides lower interest rates.


According to the contract, the Treasurer agrees to pay the principal and interest on the bonds when due, subject to an annual appropriation by the Legislature. At the same time, the borrower (JFK Medical Center) enters into a loan agreement with the Authority to make payments equal to the principal and interest on the bonds plus other related costs and fees. The NJHCFFA, under contract with the Treasurer, will pay those funds directly back to the State.


Consistent with the HATP, the proceeds of the Series 2009 bonds were used to pay off outstanding debt related to Muhlenberg Regional Medical Center, which closed last year, and to renovate and expand nearby JFK Medical Center to meet the increased demands of the service area population. More specifically, the proceeds refunded bonds issued through the Authority on behalf of: JFK Medical Center in 2005; the Community Hospital Group in 2003; Muhlenberg Regional Medical Center in 2000; Hartwyck at Oak Tree in 1998; and, JFK Health Systems in 1995 and 1993. Proceeds also funded an increase to the inpatient capacity and an expansion of the emergency department (among other renovations and improvements) at JFK Medical Center.


Based on the State's backing pursuant to the HATP contract, the bonds received an "A+" rating from Fitch, "A1" from Moody's and "AA-" from S&P. The encouraging ratings helped to yield the low all-in true interest cost of approximately 5.77%.


JFK Medical Center, a 399-bed teaching hospital, is a subsidiary of Solaris Health System ("Solaris") which encompasses a wide array of organizations, services and facilities in central New Jersey. Solaris' other affiliated organizations include: the JFK Muhlenberg Campus (a Satellite Emergency Department with support services and health education); JFK Hartwycks Nursing, Convalescent and Rehabilitation Centers (three locations providing a total of 600+ long-term care beds); The JFK Johnson Rehabilitation Institute (a 94-bed comprehensive rehabilitation facility); Whispering Knoll (a three-story assisted living facility); JFK MediPlex Surgery Center (a free-standing facility for same-day surgery); and The Muhlenberg Harold B. and Dorothy A. Snyder Schools (an education program for Nursing, Medical Imaging and Therapeutic Sciences).


The Authority was created in 1972 by an act of the Legislature to provide not-for-profit health care providers with access to low-cost capital. It is the primary issuer of municipal bonds for New Jersey's health care organizations. During its 35+ year history, the Authority has issued over $16 billion in bonds on behalf of over 145 health care organizations throughout the state.