Sequestration-related cuts are posing a bottom-line threat to nonprofit hospitals, as indicated by a recent downbeat report from Moody's Investors Service, reported Reuters.
The sequester, which is reducing Medicare payments to hospitals by 2 percent across the board, will slash payments to inpatient facilities by $11 billion this year.
"Most vulnerable to the cuts are hospitals that have an outsized reliance on Medicare reimbursements, especially those which have not yet budgeted for the cuts or made commensurate adjustments to expenditures," Moody's said Monday in a statement.
The credit rating agency also highlighted 15 hospitals and health systems considered most vulnerable as the result of the sequester. The report notes most of those providers reside in states with large retirement communities. In fact, seven of the 15 hospitals are located in Florida--including Central Florida Health Alliance, Flagler Healthcare System and Citrus Memorial Hospital.
In addition to the pressures posed by the sequester, Moody's also warns a "grand bargain" struck to reduce federal budget deficits could lead to further financial pressures on hospitals, as well as an inability to fix the issues surrounding the sustainable growth rate (SGR) payment formula for physicians.
Moody's has posted negative forecasts for not-for-profit hospitals for five consecutive years, Reuters noted.