Under the law, hospitals in the state must limit spending increases to a rate that is no greater than the state’s gross state product through 2017. After 2017, hospitals must keep spending a half percentage point below the GSP, or they could face a $500,000 penalty.
Although S&P analysts believe Massachusetts hospitals have been successful at cutting costs and implementing alternative payment models over the past few years, they may reach a plateau where it will be hard to reduce expenses further — which will impact margins and credit ratings.
“Standard & Poor’s believes ratings will likely remain stable for at least the next year and [a] half as they have in the past following the implementation of healthcare reform legislation,” according to the news release. “Over the longer term, however, Massachusetts providers could be at a disadvantage if they are unable to cut costs deeply or quickly enough to meet the law’s requirements.”
Moody’s Investors Service issued a similar report in August, saying the legislation overall is a “credit negative” for Massachusetts hospitals because the law will “limit their revenue growth and reduce their operating flexibility.”
More Articles on the Massachusetts Healthcare Law:
Moody’s: New Massachusetts Law Will Hinder Hospitals’ Revenue Growth
Massachusetts Governor to Sign Healthcare Spending Bill Today
Reduced Reimbursement Isn’t “Reform,” Says CEO of Massachusetts Hospital Assoc.
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.
