Moody's Investors Service said today that minimal volume growth, smaller growth in reimbursements, higher costs and management turnover are all drags on the financial performance of not-for-profit hospitals, giving the ratings agency a "modestly negative" outlook for hospitals in 2004. These negatives outweigh some positive trends, Moody's said, such as targeted reimbursement increases and the stifling of specialty hospital competition in the Medicare Modernization Act of 2003, a general economic recovery, an easing of nurse labor rate increases and revenue cycle management improvements made by hospitals. Moody's said hospitals also face growing capital needs, as shown by increases in capital spending of better than 12% in both 2002 and 2003. Moody's said median debt service coverage did improve in 2003. Moody's rates the credit of about 570 not-for-profit hospitals and health systems. -- by Vince Galloro
Moody's modestly negative on hospital credits
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