$100B federal hospital aid won't fully compensate lost revenue, Moody's says

The $2 trillion federal coronavirus aid package signed into law that includes $100 billion for nonprofit hospitals won't completely cover the revenue hospitals will lose as a result of the pandemic, Moody's Investors Service wrote in an April 3 note.

While the aid package includes several provisions like compensation for lost revenue, increased Medicare reimbursement and advances on future Medicare reimbursement, cash flow at nonprofit hospitals will still likely be materially lower for the next several months. Postponed services alone are likely to reduce hospital revenue by 25 percent to 40 percent a month on average, Moody's said, a reduction that is affecting even hospitals that aren't treating large COVID-19 case loads.

"The $100 billion aid package provides some relief to hospitals by supporting their operations and providing access to critical supplies," Dan Steingart, vice president at Moody's, said. "However, it is unlikely to fully compensate the sector for the two main financial challenges facing providers as a result of the coronavirus outbreak. The first is a material decline in revenue and cash flow as profitable elective surgeries, procedures and other services are postponed to preserve resources and avoid spreading the virus. The second is difficulty curbing expenses as surge preparation costs offset any expense reductions from postponed or canceled services."

Moody's maintained its negative outlook on nonprofit hospitals. 

More articles on healthcare finance:
8 hospitals furloughing staff in response to COVID-19
12 hospitals furloughing staff in response to COVID-19
Quorum Health faces bankruptcy as COVID-19 bears down

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