Not-for-Profit Provider Outlook 'Negative,' Says Moody's

John Commins, for HealthLeaders Media , January 27, 2012

"Some of it is going to hinge on what happens with the economic recovery because that is underlying a lot of these pressures. To the extent the economy picks up that would be a primary factor driving a more stable environment," Martin told HealthLeaders Media.  

Moody's cited several "negative factors supporting the outlook," including:

  • Pressures on hospital revenues coming from a variety of sources, including Medicare, Medicaid, and commercial payers
  • The myriad challenges brought on by healthcare reform, including the transition to a new care delivery model and the uncertainties that come with it, and the increase in physician employment
  • The soft economy, which will continue trends in lower utilization, high unemployment, and increase reliance on charity care, self-pay, and government payers.
  • Ongoing investment losses caused by volatile bond and equity markets, pension fund obligations, increased capital spending funded with cash reserves, increased exposure to non-cancelable operating leases, and negative valuation of swap portfolios. 

All is not lost, however. Moody's identified several positive trends in the sector that may someday help to restore a positive outlook. Those trends include:

  • Mergers and acquisitions that generally strengthen health system balance sheets, improve efficiencies, and provide an exit strategy for bond holders
  • Historically low interest rates and low expense growth
  • Improved management and governance,
  • Growth in state-administered provider fee programs that create short-term relief from Medicaid reimbursement cuts
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1 comments on "Not-for-Profit Provider Outlook 'Negative,' Says Moody's"

bob (1/27/2012 at 9:45 AM)
I share Bruce McPherson's optimism. Clearly, there will be less income, but that is a necessary good thing for the economy, especially when leading providers are able to reduce expenditures without adverse impact on access as well as positive impact on so many are demonstrating.




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