The reduced payments and increased demand for efficiencies that will come with the implementation of health reform legislation could be a problem for not-for-profit hospitals and health systems. Stand-alone community hospitals especially "will struggle financially," says Moody's Investors Service in the report, "House Approval of Healthcare Reform Signals Sweeping Changes and Mixed Credit Effects", according to the HFMA's Healthcare Financial News.
Many key provisions of the health reform law won't become effective until 2014, so most hospitals have a little breathing room to prepare, says Moody's. And there are some positives: Hospital charity care and bad debt expenses should drop as more Americans become insured. In addition, hospitals that employ doctors should see revenue gains from increased Medicaid payments to primary-care physicians.
However, "hospitals will be pressured to operate more efficiently, forcing spending cuts and mergers among smaller hospitals after 2014," says Moody's. All hospitals will have to deal with decreased Medicare reimbursement and disproportionate share funding, and high-cost, inefficient hospitals could see further Medicare reductions.
To learn more about the outlook for hospitals:
- read the HFMA's Healthcare Financial News article