Lower Inflation Casts Positive Credit Outlook for Not-for-Profits
March 18—The downward trend in healthcare inflation over the past three years has favorable credit implications for not-for-profit hospitals, as it has driven managers to control spending and develop more efficient care delivery models, according to a Moody's Investors Service report Lower U.S. Healthcare Inflation Is Credit Positive for Not-for-Profit Hospitals.
Meanwhile, reduced federal spending has mixed credit implications for not-for-profit hospitals, according to Moody’s. The slowdown in healthcare spending means a constriction of federal dollars allocated in total to hospitals and physicians, forcing a decline in revenue growth for the industry, the rating agency said in a release.
Combined Medicare and Medicaid spending currently accounts for 23 percent of all federal outlays in 2012. The Congressional Budget Office estimates that, by 2020, spending on Medicare and Medicaid will be approximately 15 percent—or $200 billion—less than what it had projected in March 2010. Even with this lower amount, combined Medicare and Medicaid expenses will rise to about 26 percent of federal outlays by 2020.
Publication Date: Monday, March 18, 2013