But the 4.3% increase in expenses represented some moderation from the 5.5% increase in 2012. “This is the first year that we see expense growth but at a slower rate,” Ewing said, suggesting that hospitals and systems are working on cutting costs and realizing economies of scale.
For providers, tighter margins mean less capital to reinvest in their operations. “Our sense is that many hospitals are judiciously re-examining their capital spend,” said Lisa Goldstein, a Moody's analyst. When they do spend money, it's on information technology or acquisitions and less on their facilities as they fill fewer beds, she added. Year-to-date borrowing also has declined.
Through June 30, Moody's has downgraded 30 hospital credits, compared with 11 upgrades. That's a faster pace of downgrades than in the previous 12-month period, when they outpaced upgrades by a 2-1 margin.