Healthcare Financial News

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.

More than half (59 percent) of U.S. businesses in 2009 intend to increase employees’ deductibles, copayments, or out-of-pocket spending limits, according to preliminary data of a national survey released Sept. 4 by Mercer. The preliminary results included the responses of about half of the 3,000 large companies surveyed who responded.

The survey found that healthcare costs for workers and employers will increase by an estimated 5.7 percent in 2009, the same rate as this year. According to Mercer, healthcare cost growth has been about 6 percent since 2005, and although the rate is lower than the double-digit increases in previous years, it still is growing at a faster rate than inflation or workers’ wages.

The survey also found that 47 percent of the companies are encouraging enrollment in health plans with lower premiums and higher deductibles, and that 19 percent intend to offer consumer-directed health plans. Read the press release.