Bondholders should be wary of Meaningful Use funds

Bond ratings service Fitch Ratings has issued a warning regarding the short-term impact of the HITECH funds as part of the 2009 stimulus package. The funding to install electronic health record (EHR) systems is "positive for hospitals, providing them with a timely source of additional funding as revenue growth in the sector remains constricted." However, Fitch said bondholders should realize these funds are nonrecurring, only partially offsetting the capital costs of EHR implementation.

Fitch added that investors should "recognize that otherwise anemic revenue growth may be masked by these nonrecurring funds over the next four to five years. Only hospitals that are already financially strong will be able to afford the high cost investment in EHR technology." Statement