Moodys Investors Service is projecting a stable outlook in both operating performance and financial position for not-for-profit hospitals in 2007, although some softening in operating performance from 2006 levels is also expected. However, as challenges continue to outweigh the positive credit factors, the rating agency said it is maintaining an uncertain midterm outlook for 2008 and 2009. The outlook is supported by favorable Medicare rates, a stable economy and better management of financial resources and strategic initiatives. These favorable results will be challenged in coming years by anemic growth in patient volumes, increasing competition among providers of both inpatient and outpatient services, and higher capital spending, Moodys said. Moodys also anticipates that a larger part of managements time and board agendas will be consumed by federal scrutiny over not-for-profit hospitals tax-exemption and hospital billing practices. There will probably be no major overhaul of the healthcare industry before the next presidential election in 2008, according to Moodys, but the industry still could be challenged by lower Medicare reimbursement, commercial insurance rates, a growing number of uninsured patients and increased consumerism. -- by Cinda Becker
Not-for-profits outlook stable: Moodys
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