A Jan. 16 report from Moody’s Ratings examines the potential healthcare policy shifts that could affect nonprofit and for-profit hospitals. Here are five things to know:
1. Efforts already implemented to identify cost reduction opportunities within the Medicaid program.
“Hospitals could suffer from significant federal funding cuts and regulatory changes affecting Medicaid and state directed payments, which are administered by state Medicaid agencies but approved by the federal government,” the report notes. “A reduction in Medicaid or [state directed payments] would disproportionately impact hospitals in states that expanded Medicaid under the Affordable Care Act.”
2. Changing Medicaid and subsidy policy could lead to more uninsured or self-insured patients and more deeply affect hospitals serving low-income and vulnerable populations, according to the report. Hospitals may see more uncompensated care as a result, challenging resources and margins.
3. Moody’s anticipates fiscal deficits will grow during the second Trump administration which, alongside possible deregulation and looser scrutiny on mergers and acquisitions, will affect the economy.
“Changes in financial regulation could impact the availability and cost of capital for hospitals,” the report says. “If the Trump administration’s policies lead to deregulation of parts of the financial sector, that might make it easier for hospitals to access loans and financing for capital projects such as facility upgrades.”
4. Higher tariffs on imported medical supplies, pharmaceuticals and equipment would increase supply costs, which have remained high over the last year. Supply and drug expenses per calendar day were both up 9% year to date in November 2024 compared to 2023. Over the last three years, supply expenses have jumped 20%, according to Kaufman Hall’s “National Hospital Flash Report.”
“Hospitals, which operate on tight budgets, may struggle to absorb these additional expenses,” the Moody’s report notes.
5. The labor market may tighten if the new administration clamps down on immigration. While clinical staff may be more protected from stricter immigration policies and enforcement, non-clinical and lower-skilled labor jobs may be affected and hospitals could see increased competition and costs as a result, according to Moody’s.
