Moody’s: Sequestration Cuts Pose New Challenges for Not-for-Profit Hospitals
April 9—The 2 percent reduction in annual Medicare payment rates mandated by federal sequestration over the next 10 years will further challenge not-for-profit hospitals, according to a report issued Monday by Moody’s Investors Service.
Most vulnerable are hospitals that have an “outsized reliance” on Medicare payment, especially those that have not yet budgeted for the cuts, the report says. Sequestration could also affect the sector by hampering economic growth, which could lead to declining inpatient admissions.
The Centers for Medicare & Medicaid Services (CMS) estimates the cuts will lower revenues of hospitals, physicians, and other healthcare providers by a total of $11 billion in 2013.
In the report, The Sequester Series: Sequestration’s Medicare Reductions Present New Headwinds for Not-for-Profit Hospitals, Moody’s notes it is not taking any rating actions because of sequestration at this time, but will continue monitoring developments. The rating agency has had a negative outlook on the not-for-profit healthcare sector since 2008.
Publication Date: Tuesday, April 09, 2013