Moody’s Investors Service last week revised its outlook on $650 million of outstanding A3-rated CareGroup Inc. bonds to positive from stable.

CareGroup owns the Beth Israel Deaconess Medical Center, Mount Auburn Hospital, and New England Baptist Hospital. Inpatient admissions increased at BIDMC by 2.7% in fiscal 2010 and 2.5% system-wide, according to Moody’s.

The health care provider’s operating cash flow increased to $193 million in fiscal 2010 after two years of declines in its cash-flow margins.

“The affirmation of the A3 rating and revision in the outlook to positive from stable reflect CareGroup’s stable operating performance and market share among each of its hospitals,” Moody’s said.

Credit challenges include an unfunded pension liability of $127 million, high lease payments for research space, and a reliance on BIDMC, which accounts for 70% of system revenues.

CareGroup issued debt through the former Massachusetts Health and Educational Facilities Authority. MassHEFA is now a part of the Massachusetts Development Financing Agency.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.