Moody’s, Fitch Ratings and S&P affirm UPMC’s long-term credit

PITTSBURGH, Feb. 10, 2010 - In the midst of a challenging economy and market, UPMC today announced it has received favorable updates on its credit ratings from all three rating agencies.  Moody’s has affirmed UPMC’s Aa3 rating and improved its ratings outlook from negative to stable.  Fitch has affirmed UPMC’s AA- rating, also improving its ratings outlook from negative to stable. Standard & Poor’s has maintained UPMC’s existing A+ rating and stable outlook. Today’s updates are a reflection UPMC’s close attention to quality and costs, which has yielded tangible returns in the financial markets.

Moody's

On February 10, 2010, Moody’s affirmed its ‘Aa3’ long-term rating on UPMC’s outstanding tax-exempt bonds and changed its Rating Outlook from Negative to Stable.  Moody’s revision of their Rating Outlook to Stable reflects UPMC’s abilities to respond to operating pressures quickly and effectively and meet projected operating and liquidity targets while supporting a large capital plan and increased pension funding.

Moody’s cited a number of factors supporting its ‘Aa3’ of UPMC, including:

• Role in the delivery of clinical care and unrivaled impact on the region’s economy
• Preeminent clinical reputation and wide patient draw regionally and nationally, supporting future growth
• Mature and successful integrated delivery system, which includes more than 2,700 employed physicians and a growing managed care business model, with all divisions meeting financial and strategic imperatives
• Management’s pro-active initiatives to improve operational efficiencies, including management’s ability to balance capacity with community need to meet clinical demands while justifying clinical expenditures
• Strong and consistent patient demand well secured by geographic diversity, ambulatory surgery centers, cancer centers, an array of post-acute care settings, insurance products and a formidable physician network
  • Sound relationship with Aa2-rated University of Pittsburgh that bolsters research position

Fitch Ratings

On February 9, 2010, UPMC received an affirmation of its ‘AA-‘ long-term credit rating from Fitch Ratings, with a change in its Rating Outlook from Negative to Stable.  Fitch cited an improvement in operating performance, efforts to reduce exposure to interest rate volatility, recovery in the value of its investment portfolio, the dismissal of the West Penn Allegheny Health System’s antitrust case and the divestiture of nonperforming assets as its reasons for the revision in the Outlook.

Fitch Ratings continues to credit UPMC’s dominant market share presence, strong management practices and strong quality indicators; UPMC’s place on US News and World Report's Honor Roll as one of “America's Best” Hospitals for 11 years in a row; and UPMC as a model for best practices in its operations, with its use of information technology as a tool to monitor operations, enhance productivity and efficiency, sustain operational improvement, and transfer knowledge and best practices throughout its network for its ‘AA-‘ rating.

Standard & Poor’s

On February 8, 2010, Standard & Poor’s (S&P) affirmed UPMC’s long-term rating of  ’A+’ with a Stable outlook. This rating reflects UPMC’s very strong business position as an integrated regional delivery system based in Pittsburgh, with a dominant business position in Allegheny County; a solid position in a large, 29-county area in western Pennsylvania; and a close relationship with our academic partner, the University of Pittsburgh.

S&P cited the following factors supporting its rating:

• Continued market share growth within its large western Pennsylvania service area, ongoing capital investments, a strong reputation, brand-name recognition, several highly visible subsidiary facilities, and comprehensive service offerings, including women's, children's, cancer, rehabilitation, behavioral health, and transplant services
• Sizable and diverse footprint in western Pennsylvania, a large complement of employed physicians, and a health plan with more than 1.4 million covered lives
• Sound management team, which has kept UPMC very well positioned within its market as the region's dominant provider, demonstrating the ability to divest nonperforming assets when needed, and developing several nontraditional service lines, including the UPMC Health Plan
• Management's demonstrated strong commitment to implementing leading-edge information technology and financial control systems

Learn more about UPMC’s credit ratings and its other financial information here.

About UPMC

UPMC is an $8 billion integrated global health enterprise headquartered in Pittsburgh, Pennsylvania, and is one of the leading nonprofit health systems in the United States. As western Pennsylvania’s largest employer, with 50,000 employees, UPMC is transforming the economy of the region into one based on medicine, research and technology. By integrating 20 hospitals, 400 doctors’ offices and outpatient sites, long-term care facilities and a major health insurance services division, and in collaboration with its academic partner, the University of Pittsburgh Schools of the Health Sciences, UPMC has advanced the quality and efficiency of health care and developed internationally renowned programs in transplantation, cancer, neurosurgery, psychiatry, orthopaedics and sports medicine, among others. UPMC is commercializing its medical and technological expertise by nurturing new companies, developing strategic business relationships with some of the world’s leading multinational corporations, and expanding into international markets, including Italy, Ireland, the United Kingdom, Cyprus, Qatar and Japan.