STATE AGENCY APPROVES PROPOSED $58 MILLION BOND ISSUE BY FLETCHER ALLEN 

BURLINGTON, VT - This week, the Vermont Education and Health Buildings Finance Agency approved Fletcher Allen Health Care's proposal to issue up to $58 million in bonds through a tax-exempt bond issue in January 2007.

Fletcher Allen is taking advantage of a one-time opportunity created by historically low interest rates and a tax regulation that allows the organization to issue bonds related to the Renaissance Project within 18 months following the project's completion. These funds will replenish the organization's bank account for money that was used to pay for portions of the project's construction.

"This opportunity is much like a home owner taking advantage of lower interest rates to refinance their mortgage," said Melinda Estes, M.D., president and chief executive officer, Fletcher Allen Health Care.

"In this case, the proceeds will not only strengthen Fletcher Allen's finances, but also give the organization the opportunity in the future to fund initiatives focused on our core mission of further improving the quality and safety of our care," Estes continued. "Improving the quality and safety of care, and making it as cost-effective as it can be, requires significant technical support.  For example, we hope to install an electronic medical record within the next three to five years, which will require a major financial investment. However, it will improve the quality of our care and make us more efficient in the long run."

In the long term, a stronger financial picture at Fletcher Allen can lead to a better credit rating, lowering the costs of future borrowing to support patient care improvements.  Bond rating agencies are already reacting favorably to Fletcher Allen's accomplishments of the past two years.

Rating Agencies Upgrade Credit Outlook

Two institutional credit rating companies, Fitch and Standard & Poor's, announced upgrades to Fletcher Allen's credit ratings this week.  Fitch upgraded its rating to "BBB+" from "BBB" with a stable outlook, citing Fletcher Allen's strong and improving financial profile.

Standard and Poor's affirmed its "BBB" rating but changed its outlook to positive from stable.  They attributed this outlook upgrade to a well-qualified medical staff affiliated with the University of Vermont College of Medicine, a stable patient admissions trend, and an improved financial profile, including two successive years with positive operating margins.

Next Steps

Following state approval, Fletcher Allen will work with bond underwriters to complete the sale of the bonds by the end of January.