Moody’s – Hospital revenue headed south…

Last week I posted a blog about the 12 member panel selected by congress to reduce cost in the federal government.  In the blog I expressed concern that cost cutting may mean decreased Medicare reimbursement which would have devastating effects on rural hospitals like GVMH. 

Yesterday I came across a report from Moody’s, a financial ratings agency, that paints a grim picture relative to hospital revenue across the US and reinforces my concern that further Medicare cuts will impact the ability of hospitals to provided needed services to the communities they serve.

“A slowdown in admissions means that hospital revenue growth has bottomed out after two decades, making it the “most important and immediate challenge” currently facing the industry, according to a Moody’s report released August 9.

“Although hospital administrators are stressing tactics to curb expenses, nearly 20% of Moody’s-rated hospitals are operating in the red. Meanwhile, hospitals that saw gains had thin operating margins, with 63% of facilities reporting results between break-even and 5%.

“According to Moody’s, the lagging economy and high unemployment rate have discouraged patients from seeking care, which has prevented hospitals from maintaining stable-to-growing patient volumes. Lisa Goldstein, a senior vice president at Moody’s, said hospitals’ inpatient admissions rates dipped by 0.4% in FY 2010 compared to years prior—the biggest drop the ratings agency has ever observed—partly because fewer patients are seeking elective surgeries.

“Meanwhile, hospitals continue to face Medicare and Medicaid payment cuts, which now could be deeper because of federal budget reforms. “This is critical as Medicare comprises nearly half—43%—of hospital gross revenues,” Goldstein said. She added that cash-strapped states are seeking more cuts to programs like Medicaid, which will add “significant stress to not-for-profit hospitals for at least the next several years.” Commercial insurers also are facing membership declines and increased premium regulations, which can lead to lower rates for hospitals, Moody’s said.

“Internal operations challenges are exacerbating the problem, Moody’s said, noting that hospitals may face interrupted revenue streams as they move from the fee-for-service to the bundled payment model. Facilities also may experience increased revenue disruption as they adopt the ICD-10 coding system, which must be completed by Oct. 1, 2013.(Moody’s release, August 9; Wall Street Journal coverage by reporter Anna Wilde Mathews, “Hospitals Put on Sick List,” August 10.).”

About Craig Thompson

I am a young professional with two great sons, and I work in the healthcare setting. I am employed in hospital administration and serve as Chief Operating Officer at Golden Valley Memorial Healthcare in Clinton, Missouri. These are challenging and exciting times in healthcare and my blog will focus on healthcare, raising boys or being raised by boys, and living in mid America.
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