The rating on North Carolina Medical Care Commission's bonds, issued for Grace Hospital, reflects the hospital's: Historically strong finances; A 46% market share, potentially enhanced by a recent alliance with Carolinas Health Systems (CHS); and Cash balances in excess of debt. Offsetting these strengths are: Interim operating losses, A vulnerable payor mix, and A concentrated medical staff. Grace has a concentrated payor mix, with 53% of revenues derived from governmental sources. Operations are historically strong, with margins averaging about 5% over the past three years. However, Grace reported an operating loss of $58,921 for the seven-month period ending April 30, 1999. This deficit results from new physical acquisitions and Balanced Budget Act reimbursement pressures. In particular, home health payment losses
