Hospitals Still Not Over the Hump

Michelle Pointe, for HealthLeaders Media , August 24, 2009

To that end, my colleague Les Masterson reported in early August that Fitch Ratings had revised its rating outlook of six health insurers from stable to negative while maintaining six other insurers as negative. The negative outlook was based on the possibility of a reform package passing, which is likely to have negative implications on commercial insurers.

Medicare and Medicaid reimbursement rate levels also continue to be in jeopardy. Medicare did not include any reductions in inpatient reimbursement rates for 2010, but this could change. The stimulus bill helped maintain Medicaid reimbursement this year, but with state budgets under pressure, there are likely to be cuts.

Meanwhile, nonprofit hospitals' predicament may be worse when you consider the dismal performance of investments last year. "There are a few issues on the not-for-profit side that the for-profits don't have," says Diaz. "The not-for-profits have seen declines in their investment holdings and have issues around funding pension liabilities."

There is some good news in all of this. Moody's believes many for-profit hospital operators will continue to grow their cash balances as they cut back on capital spending and do fewer acquisitions.

Michelle Ponte

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