Heathcare buffeted by market, debt law and pay regs
Reimbursement cuts potentially ‘toxic,’ S&P says
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