The rating on North Carolina Medical Care Commission's bonds, issued for Duke University Hospital, reflects high expectations that the rapid changes and acquisitions occurring at Duke will ultimately benefit bondholders despite an interim weakening of financial position. Duke University's board of trustees recently voted to separately incorporate the hospital, and Duke University Hospital will no longer function as a division of the university. Instead, the hospital will have its own board of trustees and function as a wholly owned subsidiary. In anticipation of this increased flexibility, the hospital has rapidly and opportunistically pursued mergers and acquisitions that will immediately increase its scope of services and geographic draw. All agreements made after the hospital's incorporation have been reached in principal, but
