Recession would rock for-profit and nonprofit hospitals, Moody's says

Hospitals are somewhat resistant to recessions because they provide medically necessary services, but  for-profit and nonprofit institutions would both feel the sting of an economic slowdown, Moody's Investors Service says in the latest edition of its quarterly publication. 

“Adjusted admissions, a measurement of patient volumes, would come under pressure, and there would be an unfavorable shift in hospitals’ payer mix. Reimbursements would also decrease if states were to cut their Medicaid programs in order to balance their budgets,” the ratings agency wrote.

Moody’s said both nonprofit and for-profit hospitals would take hits on volume and reimbursements.

Employers may lay off workers or close in a recession. This means people would lose their health insurance coverage and be more likely to defer elective surgeries and nonemergency procedures, the agency said. Hospitals would also have fewer patients with commercial insurance and be more reliant on reimbursement from Medicare, Medicaid and self-pay patients.

Moody’s said nonprofit hospitals would be particularly sensitive to the payer shifts, because they recently have seen expenses grow faster than revenue.

In a recession, the agency said it also expects hospitals to face challenges because states would likely consider cutting Medicaid reimbursement and benefits to balance their budgets.

Read more about the agency’s latest quarterly publication here.


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