Medicaid expansion linked to lower bad debt at nonprofit hospitals, says Moody's

Bad debt at nonprofit hospitals in states that expanded Medicaid fell an average of 13 percent in 2014, according to a recent report from Moody's Investors Service.

However, nonprofit hospitals located in states that have not expanded Medicaid saw their bad debt increase through much of last year before dropping slightly in the fourth quarter.

In expansion states the decline in bad debt may not lead to significant operating performance improvements. "A reduction in bad debt will not result in stronger margins by itself," said Daniel Steingart, Moody's vice president and author of the report. "Other factors, particularly the overall economic environment and hospitals' ability to control other expenses, has a larger impact on financial performance."

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