Moody's: Hospital ratings may fall
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It won't cause the uproar of the Standard & Poor's downgrade of the U.S. long-term credit rating, but a new report is forecasting that nonprofit hospitals could be next.
Moody's Investors Service says it expects ratings downgrades among not-for-profit hospitals "will likely increase in the short term" unless those hospitals can cut costs and increase patient volumes.
That's not surprising news to hospital executives, who have been long sounding the alarm that reduced reimbursements and greater numbers of uninsured patients were squeezing them financially.
Patient revenues nationwide have gone down steadily since 2002, and hospitals have cut expenses accordingly. But Moody's says they are going to find those cost reductions harder to come by, and revenues are looking more vulnerable than ever.
Bond ratings provide investors with a snapshot of a hospital's financial health. Ratings help to determine the costs to an institution of borrowing money on the bond market.
With the formation of Congress' "super" debt reduction committee, "they are obviously going to be looking at the entitlements" such as Medicare and Medicaid, said A.J. Harper, president of the Hospital Council of Western Pennsylvania.
That has particular significance for southwestern Pennsylvania, where Medicare recipients comprise about 60 percent of hospital revenue -- compared with 43 percent nationally -- and "we have a higher average of people who are 85 and older" who tend to need more medical care, said Pat Raffaele, hospital council vice president.
Meanwhile, the still-struggling local economy means fewer people have health insurance and that has ballooned hospitals' uncompensated care for which hospitals do not get paid.
First Published August 16, 2011 12:00 am
