Moody's: Low Non-Profit Hospital Growth Due to Flat Volumes, Payor Pressures

A recent report from Moody's Investors Service showed median revenue growth among non-profit hospitals rose to 5.3 percent in fiscal year 2011 — a slight increase from the 4.5 percent the year before — but the data figures are still far below the historical revenue growth figure of 7 percent.

The nominal revenue growth reaffirmed Moody's negative outlook for the non-profit hospital sector, and analysts attributed the trend to two main factors: flat inpatient admissions and increased payor pressures.

There was no median growth rate for inpatient admissions last year, a trend Moody's has seen since its 2009 median non-profit hospital data. As hospitals move to more outpatient procedures and 23-hour stays, their reimbursements consequentially take a hit due to the lower rates for outpatient services. Medicare, Medicaid and commercial insurers are also imposing lower reimbursement rates, which has been one of the biggest drivers of slow revenue growth.

Moody's analysts found a small silver lining in the otherwise dreary news. Hospital executive teams were able to successfully control expense growth, and the median operating margin in FY 2011 increased to 2.6 percent from 2.4 percent the prior year. In addition, hospital liquidity measures stayed stable in FY 2011 because the low-interest capital markets remained strong and hospitals deferred capital spending.

More Articles on Non-Profit Hospital Financial Issues:

4 Components of a Successful Hospital Charitable Program Report

Moody's: Non-Profit Hospitals Need Individual Mandate

Moody's: 5.6% Medicaid Cuts Credit Negative for Florida Non-Profit Hospitals

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