Moody's: It doesn't look like things will get much better for nonprofit hospitals in 2019

hospital
A new report from Moody's Investors Service doesn't project great news for 2019 for nonprofit hospitals. (Getty/urfingussl)

With a report earlier this year showing nonprofit hospitals on an "unsustainable path" as expenses outstripped revenue, this year hasn't been great for nonprofit hospitals. 

Now, a new report from Moody's Investors Service doesn't project great news for 2019, either.

Why? Analysts point to soft revenue growth, weak inpatient volumes and single-digit reimbursement increases in the coming year.

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2019 Drug Pricing and Reimbursement Stakeholder Summit

Given federal and state pricing requirements arising, press releases from industry leading pharma companies, and the new Drug Transparency Act, it is important to stay ahead of news headlines and anticipated requirements in order to hit company profit targets, maintain value to patients and promote strong, multi-beneficial relationships with manufacturers, providers, payers, and all other stakeholders within the pricing landscape. This conference will provide a platform to encourage a dialogue among such stakeholders in the pricing and reimbursement space so that they can receive a current state of the union regarding regulatory changes while providing actionable insights in anticipation of the future.

They did, however, point to some signs of improvement: Expenses are expected to drop in the coming year.

RELATED: Moody's report shows trouble on horizon with 'unsustainable path' for nonprofit hospitals

“The not-for-profit healthcare outlook remains negative amid some glimmers of stability,” Diana Lee, a Moody's vice president, said in a statement. “While expense growth will slow in 2019, we expect it to still exceed revenue growth.”

What is the reason for the negative outlook?

  • Cash flow: The analysts project cash flow will be flat or could drop by up to 1% next year, making control of expenses even more crucial.
     
  • Reimbursement: Moody's projects an 8% to 9% increase in bad debt as health plans place greater financial burdens on patients and an increase in Medicare patients accompanying growth in the aging population to take a toll on revenue growth.
     
  • Volumes: Moody's said it expects revenue growth of 3% to 4% as inpatient admissions remain flat or decline slightly as nonhospital competitors expand.
     
  • Expenses: Hospitals are doing a better job at cutting costs, such as through staffing, as well as by realizing lower increases in drug prices. But it's still expected that expense growth will reach 4% to 5% as hospitals face increasing pressures including nursing shortages, increasing wages from a strong economy, specialty drugs and new technology. 

Nonprofit hospitals have been facing mounting concerns of financial pressures in recent years, with an analysis warning that nearly 10% of hospitals could be at risk of closure and close to 20% of hospitals are not operating in a "healthy" way.

 

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