Public hospitals will add financial strain to urban counties amid pandemic, Moody's says

Owning a public hospital will add additional fiscal difficulties and risks for large urban counties in the U.S. as the country deals with the coronavirus pandemic, according to a new report from Moody's Investors Service. 

The costs of preparing for the COVID-19 pandemic, coupled with revenue losses tied to the suspension of elective procedures, are straining public hospital budgets. As a result, hospitals will likely turn to county governments for funding and support, Moody's said. 

"Because of the coronavirus pandemic, large public hospitals are likely to incur greater operating losses than normal, consistent with weaker operating performance in the not-for-profit hospital industry," said Ben VanMetre, assistant vice president at Moody’s. "Counties and hospitals are both dealing with revenue and expenditure disruptions from the coronavirus, increasing the risk that large public hospitals will call on county governments to provide increased support just as counties are facing their own budget strains.”

Moody's said that county governments with strong liquidity will be able to provide hospitals increased operating support without a hit to their finances, and that the governance relationships between a county and the hospital will be a big factor in how much financial support can be provided. 

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