Standard & Poor's Corp. has a "negative" outlook on the AA rating for bonds issued by Northwestern Memorial Hospital in Chicago. The credit-rating agency said its revised outlook is based on the hospital's reduced financial flexibility.
The AA rating pertains to a new $157 million bond issue and previous bond issues totaling $122.9 million. It reflects Northwestern's strengths, including its management team, medical staff, patient utilization and historical financial performance.
The outlook was revised to negative from stable because of a slight increase in leverage and a reduction in liquidity during a time of increasing market risk.
With the planned construction of a replacement hospital and new ambulatory-care facility, by 1999 Northwestern's debt-to-capitalization percentage will increase to 30% from 21% and days cash on hand will drop to 119 from 249.
Standard & Poor's said that Northwestern's market position could be jeopardized because it hasn't made substantial progress toward development of a fully integrated delivery network.