Moody’s Investors Service on Nov. 25 issued a continued negative outlook for U.S. not-for-profit hospitals in 2014, citing reduced Disproportionate Share Hospital payments as a key factor.
“Reductions to DSH payments are a key driver of our negative outlook because of the timing mismatch between payment reductions, which are occurring now, and the potential benefit of improved payer mix, which is uncertain and will only materialize over a longer timeframe,” the credit rating agency said. Among other challenges, Medicare rates have effectively been reduced by 1.3% for 2014, inpatient volumes continue to decline due to changing Medicare criteria and other factors, and expenses such as investments in information technology continue to grow faster than revenues, the agency notes.
"Not-for-profit hospitals face a challenging landscape over the next 12 to 18 months as patient volumes shrink and revenue growth slows," said Daniel Steingart, the Moody’s assistant vice president and analyst who authored the report.
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