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Not-For-Profit Hospitals Eye Continued Low Revenue Growth

John Commins, for HealthLeaders Media, May 2, 2012

The report, Medians Drive Expectation of Low Revenue Growth Given Flat Volume Trends, Payer Pressures, notes that Medicare and Medicaid now represent 43.7% and 12.8% of gross patient revenues, respectively, based on the preliminary median data. That is up from 42.3% and 11.6% in FY 2009 and 42.5% and 12.2% in FY 2010.

The growth in government-sponsored plans as a percentage of gross revenues comes as more commercial payers are unwilling to pick up the slack.

"We are hearing it is much harder to cost-shift," Vennekotter says. "The days of the double-digit rate increases from commercial payers are over. It's all going to come back to more efficient care in the hospital and in the outpatient setting moving patients to the correct care delivery model."

"That is why we have a negative outlook on the sector. We see that as a significant challenge, especially on the revenue side. Revenue growth is going to continue to be flat compared with historical averages, so this cost shifting just exacerbates the problem," she says.

Despite the slow growth in top-line revenue, operating performance showed stability and hospital managers found cuts that improved profits, Vennekotter says.

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