Despite Merger Activity, Negative Credit Conditions Persist
Overall, then, business still stinks?
"The drivers are some of the revenue pressures that hospitals are under," Martin says. "Revenue is tightening. Many are looking for ways to reduce costs to offset that and move from fee-for-service to more value-based reimbursement. They're improving costs and increasing quality and in order to do that, you need scale."
Yes, we know all that.
At what point will the math start to work again?
Martin won't say. She just knows that the environment is so challenging for the foreseeable future that some hospitals—even some systems—will be paying higher premiums on their debt because of the perceived risk of the business. It boils down to how successful these mergers are on the whole, and nobody has a good read on that, she says.
"To the extent that these M&As reduce costs, that can be a positive," says Martin. "The potential downside is that after the initial consummation, the hospitals and health systems become distracted by integration and are unable to achieve those benefits. There are also issues with volumes and physician loyalty."
- As Medicare Advantage Cuts Loom, Disagreement Over Program's Stability
- Surgical Checklists Unused in 10% of Hospitals, CMS Data Shows
- Doctors Feel Pressure to Accept Risk-based Reimbursement
- A Fresh Look at End-of-Life Care
- Heart Attack Patient Costs Skyrocket Beyond 30 Days
- 3 in 4 Patients Want E-mail Consultations
- 3 Insider Tips on Cutting Costs without Strangling Growth
- ACGME Chief Sees 'Huge' Risk of Error in Proposed Assistant Physician Licensure
- 4 Tectonic Shifts Shaking Up Healthcare
- CVS Ramps Up Retail Clinics with Provider Affiliations