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
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.
