Look­ing for stronger vi­tal signs

Modern Healthcare - - SPECIAL REPORT -

The weak econ­omy and fed­eral and state bud­get stress mean uncer­tainty for U.S. hos­pi­tals in the com­ing year, health­care an­a­lysts say. Me­gan Neuburger, a se­nior di­rec­tor for Fitch Rat­ings, says for­profit hos­pi­tals man­aged to main­tain prof­its through the trough of the re­ces­sion, but con­tin­ued stress on state and fed­eral bud­gets and a weak econ­omy raise ques­tions about whether for­profit hos­pi­tals can main­tain that per­for­mance.

It’s un­clear whether weak de­mand re­ported by for-profit hos­pi­tal op­er­a­tors in mid-2011 will per­sist into the com­ing year, she says. Mean­while, prices paid by govern­ment pay­ers are un­der pres­sure. Govern­ment pay­ers ac­count for roughly 40% of for-profit hos­pi­tal op­er­a­tors’ re­im­burse­ment, she says.

More fa­vor­ably, Neuburger says hos­pi­tals suc­cess­fully re­fi­nanced debt to ex­tend ma­tu­ri­ties past the ma­jor pol­icy changes sched­uled to take ef­fect un­der the Pa­tient Pro­tec­tion and Af­ford­able Care Act. She notes that two up­com­ing events—the pres­i­den­tial elec­tion and the U.S. Supreme Court de­ci­sion on the health­care re­form law ex­pected in the sum­mer—could elim­i­nate some of the uncer­tainty sur­round­ing the law in 2012.

An­a­lysts had an­tic­i­pated elec­tive de­mand to re­bound slightly in the com­ing year, but re­cent eco­nomic in­di­ca­tors and uncer­tainty cre­ated by con­gres­sional dead­lock may sug­gest other­wise, she says.

Mean­while, as the months of 2012 pass, not-for-profit hos­pi­tals will con­tinue to re­spond to the weak econ­omy and pre­pare for the up­com­ing ex­pan­sion of health in­sur­ance un­der health­care re­form by seek­ing ways to squeeze spend­ing on op­er­a­tions.

Hos­pi­tal ex­ec­u­tives have moved to ag­gres­sively curb spend­ing in re­cent years, as the re­ces­sion slowed rev­enue growth and fi­nan­cial mar­ket upheaval cre­ated uncer­tainty for bal­ance sheets.

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