Moody's leery of uncompensated care backlash

Moody's Investor's Service is nervous about what the next few quarters will bring for investor-owned hospitals. In a recent report, it noted that such companies could take a serious hit to their income statements if uninsured patient volume increases or collections decrease.

It's hard to tell whether such charges may occur given the public information it has, Moody's said, but to date, figures like bad-debt expenses, accounts receivable stats and cash flow aren't being bruised by uncompensated care expenses as of yet. However, it's also said that it's not expecting stimulus funds to bolster hospitals much either.

This report follows the same story line as a previous one from March, in which Moody's predicted that for-profits would continue to deteriorate financially through 2009. It cited the swamped economy, fallen patient volumes and expanding bad debt as reasons for concern, predicting that patient volume was likely to remain lowered and bad debt high with the economy in turmoil.

All that being said, it's notable that at least one investor-owned company, Tenet Healthcare Corp., posted a $178 million profit for the first quarter of this year, compared with a loss of $31 million during the same period last year. Revenue rose 5 percent to $2.28 billion.

To learn more about Moody's outlook:
- read this Modern Healthcare piece (reg. req.)

Related Articles:
Moody's: Stimulus may not have big healthcare impact
Fitch: Investor-owned hospitals have strong operating earnings
Moody's pans profit outlook for investor-owned hospitals

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