Moody's Investors Service upgraded three hospitals and downgraded four during the third quarter of 1992, the agency announced earlier this month.

The agency also assigned 83 hospital ratings during the quarter that were either initial ratings or confirmations of existing ratings.

The rating agency said the third-quarter results showed modest improvement compared to the last few years, but added that downgrades are expected to continue outpacing upgrades at least for the near term.

"As hospitals struggle with expenses that outpace reimbursement levels and competition in most markets continues to grow, smaller facilities in both rural and inner-city areas will remain particularly hard-pressed to cope within this difficult operating environment," the agency said.

The three upgrades during the July to September period were for Conway Hospital in Conway, S.C., to Baa1 from Baa; Holmes Regional Medical Center in Melbourne, Fla., to A1 from A; and Methodist Hospital in Indianapolis to Aa from A1.

The downgrades were for Beth Israel Hospital in Boston, to A1 from Aa; Oakland's Merritt Peralta Medical Center, which is now called DBA Summit Medical Center, to Ba from Baa; Pendleton Memorial Methodist Hospital in New Orleans, to Baa1 from A; and San Bernardino Community Hospital in San Bernardino, Calif., to Ba from Baa.

Since the start of 1992, Moody's has raised 12 hospital ratings and lowered 26.

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