Not-for-Profit Hospitals Show Stability in a Challenging Market

Many not-for-profit hospitals have done a good job stabilizing margins after the Great Recession but still face continued challenges with flat inpatient volumes, healthcare reform mandates, and lower reimbursements linked to government budget pressures, a new report from Moody's Investors Service says.

The bond rating agency's report, U.S. Not-for-Profit Hospital Medians Show Operating Stability Despite Flat Inpatient Volumes and Shift to Government Payers, shows that balance sheet measures improved and cash and investments portfolios remained highly liquid. However, weak investment returns over the past year have stagnated balance sheets for most hospitals.

Overall, the financial outlook appears to be improving for not-for-profit hospitals, as executives look for new ways to cut expenses in the face of weaker revenue growth and further changes to federal healthcare policy and regulations over the next few years.

"There will be pressures going forward, but management teams have done a good job so far of responding to the recession and the changes in the healthcare market," Moody's analyst and report author Sarah Vennekotter tells HealthLeaders Media.