Both Moody’s Investors Service and Standard & Poor’s have revised their outlooks on New Jersey’s junk-rated Palisades Medical Center to positive from stable.

The outlook applies to about $37 million of outstanding debt issued through the New Jersey Health Care Facilities Finance Authority.

Moody’s affirmed its Ba2 rating and revised the outlook based on the medical center’s trend of improving financial performance in fiscal 2010 and 2011, with volume growth and operational improvements driving strong revenue growth and good cash flow.

The trend is mitigated by the current reductions in Medicare and Medicaid rates, Moody’s said.

Standard & Poor’s affirmed its BB-plus rating and also cited the hospital’s improved financial profile and positive operating income in the past two years.

“Another two years of debt service coverage greater than two [times], increased cash and investments closer to 100 days’ cash on hand, no short-term or additional debt, and relatively stable volumes are all necessary before we can consider an upgrade,” Standard & Poor’s analysts said.

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