Here are five key findings from the Moody’s report.
1. An aging population increases demand for medical services, which on its face is a credit positive for the healthcare industry.
2. The aging population will be positive for both for-profit and nonprofit hospital operators over the next five years due to older individuals utilizing more healthcare services.
3. “As utilization increases, hospitals can leverage their existing resources and spread their fixed costs, which benefits earnings and cash flow,” according to Moody’s.
4. Baby boomers retiring and leaving the workforce will affect hospital revenue mix, as a higher percentage of the population will be eligible for Medicare. “This shift away from commercial, employer-based insurance to Medicare will be detrimental to hospital earnings as reimbursement from government programs is usually lower than that realized from commercial insurers,” according to Moody’s.
5. U.S. healthcare expenditures will increase by 25 percent by 2030 due to the higher cost of caring for those age 65 or older. That increase will cause Medicare and private payers to increasingly look for ways to cut costs, which will lead to payers putting more pressure on providers.
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