Moody's: Price controls will hurt hospitals

Moody's Investors Service has issued a warning on the recent price control law passed in Massachusetts, saying it may lead to stunted revenue growth for the Bay State's hospitals, Reuters reported.

The law will limit hospitals' revenue growth "and reduce their operating flexibility," said the credit ratings agency, Statehouse News Service reported.

The legislation, signed into law by Gov. Deval Patrick earlier this month, pegs healthcare price growth in the state to how its economy grows through 2017, according to Reuters. The curbs are intended to save $200 billion over the next 15 years.

Moody's also expressed concern that a $225 million assessment on health plans and large hospitals would work to keep smaller and less competitive institutions in business, Statehouse News noted.

"The state will use an excise tax on insurers to support smaller and less profitable hospitals, potentially allowing them to remain in business longer than would otherwise be possible and limiting the ability of larger systems to consolidate and grow through acquisitions," Moody's stated, according to Statehouse News.

Moody's did note the law could have been even more onerous, but that lawmakers had dropped a "luxury tax" on the priciest providers of care.

To learn more:
- read the Reuters article
- here's the Statehouse News Service article