WASHINGTON Jan 22 Moody's Investors Service
said on Tuesday its outlook for U.S. not-for-profit hospitals
will remain negative in 2013, marking the fifth year the rating
agency has expressed concerns about the sector.
"Our sector outlook has been negative since 2008, reflecting
the lasting impact of the recession on patient volumes,
significant challenges facing the industry resulting from
changes in how hospitals are paid, and heightened pressure from
businesses and all levels of government to lower the cost of
healthcare services," said Daniel Steingart, Moody's assistant
vice president, in a statement.
Hospitals face slow revenue growth, possible federal cuts
and limited reimbursements from insurers this year, the agency
said. It added that "tepid economic growth and elevated
unemployment will dampen demand for healthcare."
Moreover, the health insurance law known as "Obamacare"
calls for more than $300 billion in reductions to Medicare
payments through 2019, Moody's added. As the federal government
begins tough negotiations to reduce its long-term debt and
deficit it could continue to seek savings in Medicare payments,
as well, it said.
One bright spot the ratings agency found was the management
decisions made by hospital boards and staff to merge or
affiliate their organizations, which has often improved
"Operating margins and leverage metrics have not
deteriorated in recent years, despite negative headwinds,
because management teams have successfully managed expenses in
light of weak patient volumes and less robust revenue growth,"