Press Release


For More Information Contact the NJHCFFA
Communications Department:
609-292-8585 X142
For Release: September 9, 2008



CONTACT: Stephanie Bilovsky
PHONE: 609-292-8585
Date: September 9, 2008




(Trenton)  On July 31st, 2008, the New Jersey Health Care Facilities Financing Authority (the "Authority") successfully issued $252,545,000 in bonds on behalf of St. Michael's Medical Center ("St. Michael's") through the Hospital Asset Transformation Program ("HATP"). The transaction is intended to provide Newark with one strong updated health care facility where three financially struggling hospitals once were. 


Newark was previously served by Cathedral Healthcare's three hospitals: St. Michael's, St. James and Columbus Hospital. All three of these facilities were in financial trouble, collectively losing roughly $6 million each month.  Catholic Health East, a multi-state non-parent corporation of health care facilities up and down the east coast, agreed to buy all three of the hospitals as long as it was allowed to consolidate the services into one of the facilities (St. Michael's) closing the other two, and contingent upon the receipt of low cost financing.


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 needed to handle the inflow of services and patients to the surviving hospital.  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 (St. Michael's) 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.


It should be noted that the Loan Agreement provides that if St. Michael's does not reach certain benchmarks, it will be eligible for partial or full forgiveness on its loan payments for up to five years. 


Consistent with the HATP, the proceeds were used to pay off outstanding debt on the two closed hospitals and renovate and expand the facilities at St. Michael's to meet the increased demands of the service area population. 


Based on the State's backing pursuant to the HATP contract, both series of bonds received an "A+" rating from Fitch, "A1" from Moody's and "AA-" from S&P.  The encouraging ratings helped to yield the low true interest cost of approximately 5.32%.


Catholic Health East is a multi-institutional Catholic health system based in Newtown Square, Pennsylvania. With facilities located in 11 states, Catholic Health East is the largest provider of home health care services (ranked by number of visits) in the nation. The system includes 32 acute care hospitals, 4 long term acute care hospitals, 36 freestanding and hospital-based long term care facilities, 12 assisted living facilities, 5 continuing care retirement communities, 8 behavioral health and rehabilitation facilities, 25 home health/hospice agencies, and numerous ambulatory and community-based health services.     


Created in 1972 by an act of the Legislature to provide not-for-profit health care providers with access to low-cost capital, the Authority is the primary issuer of municipal bonds for New Jersey's health care organizations. During its 35-year history, the Authority has issued over $13 billion in bonds on behalf of over 140 health care organizations throughout the state.