Not-for-profits face tougher road: Moody's

Not-for-profit hospitals won't do as well as the for-profit sector under the $940 billion package of health insurance and financing reforms nearing enactment, according to credit-rating firm Moody's Investors Service. Not-for-profit hospitals are more likely to operate solo or as smaller systems, which leaves them more vulnerable to reduced Medicare payments to hospitals or pressure from commercial payers to lower rates.

For-profits typically operate health systems with size and diversity, which will be an advantage as payers seek to hold down costs and push for greater efficiency, Moody's said. More insured patients—the bill seeks to expand coverage to 32 million uninsured—will mean fewer unpaid bills, but the package is estimated to save $155 billion by curbing Medicare reimbursement over a decade. Mergers and acquisitions among hospitals will likely increase after 2014, Moody's said.

Pharmaceutical companies will see an estimated $84.8 billion in levies that will erase any benefit from growing demand by the newly insured, Moody's noted. Medical device makers won a two-year reprieve, until 2013, on a $20 billion tax over 10 years, but will be negatively affected long term and may see more risk from efforts to compare device effectiveness.

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