New Medicare cuts threaten non-profit hospitals - Moody’s
New Medicare cuts threatennon-profit hospitals - Moody’sMoody’s is one of the top 3 credit ratingagencies along with Fitch and S&P. Moody’sRaymond McDaniel is Moody’s CEO.
WASHINGTON (Reuters) - Not-for-profit U.S. hospitals began confronting another threat totheir shaky finances last week with the start of reductions to Medicare that are included in theuniversal federal spending cuts known as sequestration, Moodys Investors Service said onMonday.Sequestration called for slicing 2 percent from reimbursements paid by the Medicare healthinsurance program for the elderly, beginning on April 1. That will likely lower the revenues ofhospitals, physicians and other healthcare providers by $11 billion in 2013, the rating agency saidin a special report."The cuts exacerbate an already challenging operating environment for not-for-profit hospitals asmany already face low revenue growth from both governmental and private insurance payers,"Moodys added.Not-for-profit hospitals could be hit again during negotiations by members of Congress over a"grand bargain" to reduce the U.S. debt and deficit."Moreover, there is a perennial risk that the so-called ‘doc fix will not be renewed, which wouldforce reductions to physician reimbursements," Moodys said.This is the fifth year that Moodys has had a negative outlook for not-for-profit hospitals, whichtend to serve large low-income populations.
The federal government has often posed the biggest risk to their balance sheets. Moodys in Januarynoted that the health insurance law known as Obamacare calls for more than $300 billion in reductionsto Medicare through 2019.Still, there are other threats to the sector that do not have to do with federal legislation. Mostly, the2007-09 recession drove up the numbers of people seeking treatment at not-for-profit hospitals, andthose high volumes have yet to subside.(Reporting by Lisa Lambert; Editing by Leslie Adler)Original Moody’s Article.