Heath­care buf­feted by mar­ket, debt law and pay regs

Re­im­burse­ment cuts po­ten­tially ‘toxic,’ S&P says

Modern Healthcare - - Front Page -

Stan­dard & Poor’s helped prompt fi­nan­cial mar­kets’ wide swings last week with its down­grade of U.S. credit, com­pound­ing the un­cer­tainty fac- ing health­care as Congress moves to squeeze more than $1 tril­lion from the nation’s deficit.

And to un­der­score the risk health­care com­pa­nies face in com­ing months, the rat­ings agency re­leased a re­port high­light­ing com­pa­nies’ ex­po­sure to Medi­care, a top op­tion for cuts as lawmakers pro­ceed.

Ex­pec­ta­tions that Congress will curb Medi­care spend­ing on hos­pi­tals, doc­tors and other health ser­vices to blunt the bud­get deficit have in­ten­si­fied since the Bud­get Con­trol Act, signed into law Aug. 2, set down a Thanks­giv­ing dead­line for a dozen lawmakers to draft deficit cuts of $1.5 tril­lion.

Pres­i­dent Barack Obama stated last week that “mod­est ad­just­ments” to Medi­care would be nec­es­sary to re­duce the deficit.

S&P noted last week in its re­port, The Deficit Rem­edy Could Be Toxic for U.S. Health Care Com­pa­nies, that Medi­care ac­counts for at least half of all rev­enue for nine for-profit health­care com­pa­nies. More than a dozen com­pa­nies rated by S&P garner 30% to 50% of their rev­enue from Medi­care.

“We are in a dif­fi­cult pe­riod where health­care is the fo­cus of ev­ery de­bate in Wash­ing­ton, where se­niors and their ben­e­fits are cast into a neg­a­tive spot­light,” said Tony Strange, pres­i­dent and CEO of Gen­tiva Health Ser­vices, a pub­licly traded home care and hospice com­pany, dur­ing a con­fer­ence call days af­ter pas­sage of the bud­get act.

Gen­tiva is one of the nine com­pa­nies—oth­ers in­clude dial­y­sis gi­ant DaVita, long-term acute-care com­pany Life­Care Hold­ings, and in­pa­tient re­ha­bil­i­ta­tion op­er­a­tor HealthSouth

Me­lanie Evans

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