Heartland Regional Medical Center received positive credit news from both Fitch Ratings and Moody’s Investors Service.

Moody’s affirmed HRMC’s A2 rating while revising its outlook to positive from stable due to its improved operating performance, while Fitch upgraded its rating one notch to A-plus.

The rating actions affect $193 million of outstanding revenue bonds issued through the St. Joseph Industrial Development Authority.

The medical center has experienced consistently improved and strong operating margins, an improved cash position, and good maximum annual debt service coverage. Its liquidity position improved in 2010, with cash and investments growing to $208 million, providing coverage of 167 operating days. As of February, cash levels improved to $249 million and admissions were up by 7.7%.

“We believe HRMC is well positioned, given its dominant market position, to continue to generate strong cash flow and grow cash in order to strengthen liquidity and leverage measures further,” Moody’s analysts wrote.

The 352-bed hospital had more than 18,000 admissions in fiscal 2010, generating $495 million in operating revenues. It holds the status as the only Medicare-designated community hospital located in St. Joseph County. It enjoys an 82% market share in its service area.

The hospital has no major capital spending or debt issuance planned in the near future.

Its challenges include a high dependence on government payors, with 49% coming from Medicare and 14.8% from Medicaid. All of its debt is in a floating-rate structure and it faces competitive pressures from several large providers in the Kansas City area.

“The primary credit concerns are HRMC’s debt structure and underfunded defined benefit pension plan,” Fitch wrote.

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