“The established risks facing the industry primarily result from lower reimbursement levels that will come to fruition, with or without federal healthcare reform, and are driven by the unsustainable federal deficit and the rising share of federal spending for Medicare and Medicaid,” Steingart said in a news release.
The high court's June ruling on the Patient Protection and Affordable Care Act, which allows states to opt out of Medicaid expansion, “blunts the impact of one of the law's few credit positive features,” Steingart said. The slowdown in Medicare funding also remains a significant long-term negative credit factor, he added.
Moody's expects collaboration between hospitals and insurers to continue growing, and it also expects increasing hospital employment of physicians.
“Both trends are related to reimbursement changes that all hospitals will experience under federal healthcare reform, and the need to strive to maintain market share,” Steingart said.
The January report projected modest hospital revenue growth over the next 18 months and based the negative outlook on decreased patient volumes, a weaker payer mix and stressed operating results.