The recent recommendations by the New York State Commission on Health Care Facilities in the 21st Century to close nine hospitals and reconfigure 48 others will not result in immediate rating actions on nine Moody’s-rated hospitals cited by the commission for mergers and affiliations (but not for closure). According to a Moody’s Investors Services special comment, those nine hospitals could benefit from higher patient volumes and negotiating strength by eliminating competitors. But by merging with troubled hospitals, Moody’s cautions, reconfigured hospitals could also be burdened by serving poorer patients, shoring up financially precarious institutions, and executing a difficult integration. And longer term, the commission’s actions are expected to have “material impact,” says Moody’s.
For the state’s other hospitals, the long-term effect of the commission’s recommendations will likely be positive as excess hospital capacity is removed and poor-performing hospitals cease operations. “However, there may be situations where commission-recommended affiliations create stronger providers that could possibly pose a greater market threat to other providers,” writes Moody’s. For information on this report, contact Moody’s at 212-553-1653.
