Moody’s Investors Service last week affirmed Jefferson Regional Medical Center’s Baa2 underlying rating but revised its outlook to positive from stable due to its continued strong operating profitability, improved liquidity, and favorable debt coverage measures.

The action affects $33 million of fixed-rate debt issued through the Missouri State Health and Educational Facilities Authority in 2004.

Recent operating performance has lagged, however, precluding an upgrade based on the current review, according to Moody’s. “Although, our expectation is JRMC will be able to leverage its leading market position and continue to generate favorable operating cash flow and maintain good liquidity and leverage metrics,” analysts wrote.

The hospital’s strengths include its strong market position of 51% in Crystal City in Jefferson County, strong profitability even with a recent weakening of operations, and steady growth in unrestricted cash and investments over past four years to $39.4 million at fiscal year-end 2010. JRMC has no new debt plans.

Its challenges include its position as a small provider with a revenue base of just $134 million, some softening of its operating performance due to a lighter flu season, the loss of some cardiac business, and Medicaid and Medicare cuts.

The 251-bed hospital relies on gross revenue of government payors for 67% of its business and faces competition from large systems in the St. Louis area.

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