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Not-For-Profit Hospitals Eye Continued Low Revenue Growth

John Commins, for HealthLeaders Media, May 2, 2012

If financial medians since 2009 are an accurate precursor, the nation's not-for-profit hospital sector can continue to expect low revenue growth on sluggish admissions in the current fiscal year, according to a report from Moody's Investors Service.

Moody's analyst Sarah Vennekotter says the low revenue growth is due mostly to flat volumes and payer pressures. "The flat volumes we have seen since 2009 on the inpatient side are largely a function of the economy and the slow recovery," Vennekotter tells HealthLeaders Media.

"Patients now have higher deductibles and less coverage under employer-sponsored plans. Also, outpatient volumes have grown," she says. "Some of the decline or flatness in inpatient volumes is on purpose—a strategy that hospitals are engaged in to move to a lower-cost setting in preparation for these new payment methods that are starting to come through."

The medians are presented for fiscal years 2009-2011 and by rating category. Revenue growth based on preliminary medians rose to 5.3% in fiscal 2011 from 4.5% in 2010. However, Vennekotter says the median is lower than the more than 7% that has been typical for the sector, and that's part of the reason why Moody's has given the sector a negative outlook.

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