The rating on North Carolina Medical Care Community's bonds, issued for Rex Hospital, reflects strong profitability despite a disappointing 1996 in an economically and competitively favorable market. Rex Hospital's liquidity, especially in light of this additional debt, remains a concern. Rex lost $7 million from operations for their 15 month 1996 audit - primarily due to an unfavorable exclusive contract with the area's largest HMO, Health Source. The contract has been renegotiated and Rex's profitability improved to $12 million for unaudited 1997. The hospital's $6 million 1997 operating income was dampened by losses at their 52 physician primary care company. However, many of the practices are still in start up phases, Rex has plans in place to generate improvements, and
