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Moody's Gives For-profit Hospitals 'Stable' Outlook

John Commins, for HealthLeaders Media, March 9, 2011

Moody's rated the median profit margin of for-profit hospitals at about 15%.

The report said that:
  •  Investments that hospitals are making to foster future growth could also compress margins in the near term. These include upgrading information technology and aligning with physicians in a bid to boost patient referrals.
  • Growth in adjusted admissions will likely remain weak as the uninsured or people whose premiums and co-pays have risen continue to defer non-urgent care. Birth rates, and related hospital admissions, have also declined amid high unemployment and economic sluggishness. This trend will likely continue constraining volume growth.
  •  Pressure on pricing should continue as commercial insurers resist payment increases and Medicare reimbursements fall.
  • Longer-term factors should support demand for hospital services, including the aging baby boomers and consumers' increased access to healthcare through the 2010 industry reform package.

John Commins is a senior editor with HealthLeaders Media.

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