Fitch Rates Rush University Medical Center (Illinois) Series 2009C&D Bonds 'A-'; Outlook Stable

CHICAGO--(Business Wire)--
Fitch Ratings has assigned an 'A-' rating to approximately $200 million of
Illinois Finance Authority revenue bonds series 2009C&D (Rush University Medical
Center Obligated Group). In addition, Fitch affirms the 'A-' rating on the
outstanding Rush University Medical Center Obligated Group (Rush) revenue bonds.
The Rating Outlook is Stable.

RUMC has bonds outstanding issued through the following issuing authorities:

--Illinois Finance Authority;

--Illinois Health Facilities Authority.

The series 2009C&D bonds are expected to be issued as fixed-rate bonds. Proceeds
will be used to fund a portion of the construction costs related to a new
patient tower and related projects at the Rush University Medical Center (RUMC)
campus, fund various capital improvements at Rush Copley Medical Center (RCMC),
repay certain taxable indebtedness incurred by RCMC to fund capital expenditure,
fund debt service reserve accounts on both series of bonds and pay costs of
issuance. The bonds are expected to be priced the week of July 6 or July 13 via
negotiation.

The factors supporting the 'A-' rating remain unchanged since Fitch's prior
rating actions (see Fitch's press releases dated Jan. 16, 2009 and Nov. 25, 2008
available on the Fitch web site at www.fitchratings.com) reflecting the strong
support of the medical staff at the obligated group's flagship facility, Rush's
solid financial profile, the regional draw of patients due to RUMC's reputation
and clinical excellence, and the strong fundraising and philanthropic support.

Located on the near west side of Chicago, RUMC is unique among health care
providers in that the medical school, the research enterprise, the employed
medical staff, and the hospital operate as a single business entity. Fitch
believes that current management has been able to achieve successful integration
of these areas, resulting in a very supportive and productive operating
environment for the physician staff. In turn, the organization benefits from the
strong support and allegiance of the medical staff, 80% of whom admit solely to
RUMC (or an affiliated institution), providing a fairly stable operating profile
and solid operating performance.

Since fiscal 2004, Rush has generated year-over-year improvement in many of the
key liquidity, profitability and capital related ratios used in Fitch's
analysis. On June 30, 2008 the obligated group's total unrestricted cash and
investments of $524 million translated into 133 days cash on hand (DCOH), a
cushion ratio of 14 times (x), and 141.4% cash to debt. However, due to negative
investment returns and sizable capital spending, Rush's unrestricted cash and
investments position has declined to $450.6 million on March 31, 2009 which
equates to a somewhat light 121 days cash on hand and 94% of long-term debt.

Effective Dec. 31, 2008, the 225-bed Rush North Shore Medical Center (RNS)
withdrew from the Obligated Group and was merged into NorthShore University
Health System. Excluding the results of RNS, Rush's operating profitability has
been very stable reflecting solid inpatient and outpatient volume growth since
fiscal year (FY) 2005. In fiscal 2007 and 2008, Rush generated operating EBIDA
margins of 12.1% and 10.8%, respectively, which compares favorably to Fitch's
2008 'A' median of 10.5%. Through the nine-month interim period (ended March 31,
2009) Rush's operating EBIDA margin was 11.3%.

Furthermore, RUMC's reputation for clinical excellence and innovation draws
patients from the eight-county greater Chicago land area which encompasses a
total population in excess of 8.5 million people. In 2008, Rush was named by
U.S. News and World Reports as 'Top Hospital' in seven clinical specialties and
higher than any other Illinois hospital in Orthopedics. Finally, RUMC has
historically enjoyed generous community financial support. As of March 31, 2009,
Rush had received $264 million in gifts and pledges toward its $300 million
capital campaign. Approximately $180 million of the total is expected to be
invested in facilities.

Fitch's primary credit concerns are the development risk inherent in the campus
repositioning/replacement project currently underway at RUMC and the elevated
proforma debt burden. In response to the more difficult operating and financing
environment, management has completed a risk assessment analysis and has
developed project contingency plans to address higher costs of capital and
potential weakening of patient volumes. Construction has begun on a new patient
tower, an expanded parking deck, the energy infrastructure and a new ambulatory
services building. Upon closing of the series 2009C&D issue, Rush's long-term
debt increases to approximately $708.4 million which represents 3.5x FY 2008
EBITDA and is 52.3% of FY 2008 capitalization both of which exceed Fitch's
respective 'A' medians of 2.9x and 38%. Proforma maximum annual debt service
(MADS) is estimated at $55.8 million which is 3.4% of FY 2008 total revenues.

The Rating Outlook remains Stable. Fitch believes that Rush's strong management
practices and controls combined with its project contingency plans should allow
the system to maintain relative operating profitability in the changing health
care environment. The issuance of the series 2009C&D bonds is viewed positively
as it completes the debt financing requirements for the Campus Transformation
project and eliminates capital market access risk.

The Obligated Group currently consists of three acute care hospitals, a medical
university, research facilities, a physician group practice with 358 employed
physicians, and a rehabilitation/skilled nursing facility. The three acute care
hospitals have a total of 1,011 staffed beds and are located in Chicago, Oak
Park and Aurora, IL. In fiscal 2008, the Obligated Group reported total revenues
of $1.48 billion (excluding RNS). The Obligated Group's disclosure practices are
among the best in Fitch's health care portfolio with quarterly and annual
disclosure consisting of balance sheet, income statements and cash flow
statements, utilization statistics and a management discussion and analysis. In
addition, financial disclosure is posted on Digital Assurance Corporation web
site at www.dac.com.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, Chicago
Jim LeBuhn, 312-368-2059
Anthony Houston, 312-368-3180
Cindy Stoller, 212-908-0526
(Media Relations, New York)
cindy.stoller@fitchratings.com

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