Nonprofit hospitals hurt by any Supreme Court ruling

Damned if they do. Damned if they don't. Any outcome of the U.S. Supreme Court ruling on health reform will hurt nonprofit hospitals, according to Moody's Investors Service's report yesterday. Regardless of whether the highest court in the land upholds or repeals the 2010 Affordable Care Act, nonprofit hospitals' credit ratings could be negatively affected, Moody's noted.

"Since its passage, we have viewed healthcare reform as a net credit negative because it mandates annual Medicare reimbursement reductions to hospitals, which outweigh the benefits of lower rates of uncompensated care," Moody's report author Mark Pascaris said in a company statement.  

Out of the three possible outcomes, the best one for hospitals would be if the Court upholds the law entirely, which would be a credit-neutral event for not-for-profit hospitals that already have been preparing for the law since its passage in April 2010.

If the Supreme Court strikes down the individual mandate but retains other provisions, it would clearly hurt nonprofits, as the number of uninsured Americans will remain high and hospitals must continue to provide uncompensated care, Moody's noted.

In the third scenario, if the Supreme Court repeals the health reform law entirely, including the individual mandate, "the resulting absence of legislative and regulatory framework for curtailing unsustainable Medicare spending creates substantial new uncertainties and is credit negative for the sector," Pascaris said.

If the law does stand, Lynn Massingale, founder and chairman of staffing provider TeamHealth, predicts emergency departments will see a modest increase in reimbursements. In addition, ED volume will increase because of widespread coverage and the shortage of primary care providers.

"At the very least, EDs could expect Medicaid-level reimbursement from much of the previously uninsured population," Massingale told Beckers' Hospital Review.

If the law is upheld, the impact on EDs will not be as significant because reimbursement will remain similar to what it is today, but EDs still will see increasing patient volumes.

Regardless of the court's ruling and the November elections, policymakers will have to address the federal budget deficit, which almost certainly means altering Medicare and Medicaid funding, Reuters reported.

For more information:
- see the Moody's statement and report (subscription required)
- read the Reuters article
- see the Beckers' Hospital Review article

Related Articles:
Hospitals to see more bad debt without health reform
Hospitals, docs unsatisfied with Affordable Care Act
Insurers prepare for worst-case scenario in Supreme Court ruling