NEW YORK - Moody's Investors Service said it has upgraded the rating on Virginia Hospital Center Arlington Health System's (VHC) outstanding debt to A1 from A2. The A1 rating applies to $137.8 million of outstanding debt, which was issued through the Arlington County Industrial Development Authority. The rating outlook is revised to stable from positive.

The upgrade to the A1 rating is based on VHC's favorable payor mix; strong operating margins; ample liquidity; and moderate debt load, which is 100% fixed rate. These attributes are tempered by a slightly aggressive asset allocation and the highly competitive service area of Northern Virginia. The stable rating outlook reflects our expectation VHS's liquidity and operating performance and will remain sound, although future margins are unlikely to approximate the very favorable results of fiscal years (FY) 2009 and 2010.

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