Moody's Downgrades Murray-Calloway County Hospital, Ky., to Baa3

Moody's Investors Service said it has downgraded to Baa3 from Baa2 the long-term rating assigned to Murray-Calloway County Hospital's $42.2 million of rated debt outstanding issued by the city of Murray, Ky.

The outlook is negative.

The downgrade is attributable to a decline in operating performance in fiscal year (FY) 2012 that has continued into interim FY 2013 (6.0% operating cash flow margin) and is driven by declining admissions and reimbursement issues related to the State of Kentucky Medicaid Managed Care Organization program.

The hospitals small size exposes it to greater susceptibility to unforeseen events.

The negative outlook is attributable to anticipated struggles with improving operating cash flow along with a modest with under 100 days cash and low cash-to-debt. The management team is aggressive in its initiatives to address the operational issues.

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