Most rated not-for-profit hospitals and health systems continue to show resiliency in financial performance, with rating downgrades to upgrades nearly equal through the first six months of 2008, according to the most recent industry outlook published by Moody’s Investors Service. Although many healthcare providers have adapted to the new Medicare severity diagnosis-related group reimbursement without negative effects to their financial position, and the inpatient payment rule to become effective Oct. 1 provides a rate increase for inpatient services, Moody’s nevertheless expressed concern over the proposed “bundled payment” concept currently being tested by the Centers for Medicare and Medicaid Services.
Still, the rating agency said it expects to see “most hospitals’ financial performance in 2008 continue to stabilize or decline from 2007 given the substantially weaker economy and negative effects on patient volumes and revenues.” Among implications from the weakening economy are higher charity care levels as employers reduce or discontinue healthcare coverage, increasing bad debt expense, and potential reductions in Medicaid reimbursement. For more information, call (212) 553-4431.
